Elon Musk is looking to raise up to $3 billion, News according to a Wall Street Journal report.
To pay down some of the more expensive debt he took on to buy Twitter
In a tweet asking Musk if the reported fundraising attempt was true or not, the Twitter CEO wrote: “No.” Really? Lets’s Go Inside…
Elon Musk’s team has held talks with investors about raising up to $3 billion to repay some of the $13 billion in debt tacked onto Twitter Inc. as part of his buyout of the company, people familiar with the matter said. Source ( Now this matter is Volatile )
In addition to the secured overnight financing cost, which has increased recently, Twitter’s $3 billion in unsecured bridge loans have a 10% interest rate.
According to regulatory records, the interest rate increases by 0.50 percentage points for each quarter that passes without a refinance.
However, Twitter’s financial commitments would be much easier to meet if it could repay those unsecured bridge loans.
However, there is no assurance that the fundraising would succeed because investors are still sceptical of Twitter’s capacity to produce cash flow.
Former credit analyst Jeffrey Davies estimated that Twitter’s annual total interest expense would be around $1.25 billion in December. With interest payments, that equals just under $3.4 million every day.
In December, Elon Musk anticipated that Twitter’s operations will become profitable in 2023 as a result of cost-cutting initiatives (including letting go of some 6,000 staffers).
Remember that Twitter hasn’t turned a profit in four years and has lost money eight out of the last ten years.
What possible means do you see for Elon Musk to increase Twitter’s revenue? Please tell us in the comments. Source
