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So where exactly did Musk get the money from? He didn't have cash on hand and it seems unlikely he could liquidate enough to get it. Did he LBO Twitter? Is it about to get a ton of debt?Permalink On twitter.com
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So: "Morgan Stanley, Bank of America, and several other banks have promised to lend $25.5 billion, backed in part by some of Musk's Tesla shares, according to the filing." npr.org/2022/04/21/1094020022/elon-musk-twitter-money So yeah, a lot of debt and I bet Musk isn't going to keep it on his personal books.Permalink On twitter.com
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So it looks like it may be around $13B in debt that is entirely the banks that would almost def end up assigned to Twitter. Maybe more depending on what happens with his personal loans.Permalink On twitter.com
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To put that in perspective, the two years Twitter made a profit it was $1.2b & $1.4b macrotrends.net/stocks/charts/TWTR/twitter/net-income Twitter has reinvested heavily and had a bad lawsuit in 2021, but almost broke even after a bad 2020. prnewswire.com/news-releases/twitter-announces-fourth-quarter-and-fiscal-year-2021-results-301479494.html ...Permalink On twitter.com
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If Twitter returned to profitability this year at the rate it saw when it was last profitable we're likely talking 10 years before it is out from under the pre-interest debt. Companies in that situation tend to approach it 1 way: cut everything. Salaries & staff go down for sure.Permalink On twitter.com
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It raises the question... is Musk more interested in buying Twitter... or getting rid of it? Because companies under a ton of debt do not historically do well.Permalink On twitter.com
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And while I have zero respect for Musk as a technologist I do think he understands business well enough to understand what he's doing if he assigns that debt to Twitter.Permalink On twitter.com
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As to why boards accept these deals? Well it makes them a lot of money and the only responsibility a board has in a modern corporation is to make stockholders money. hollywoodreporter.com/business/digital/jack-dorsey-parag-agrawal-pay-twitter-execs-could-see-massive-paydays-if-elon-musk-takeover-closes-1235134985/Permalink On twitter.com
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It does make me wonder if they were hoping the poison pill would let the stock spike and give them leverage to get out of the offer that way. But who knows, maybe getting out wasn't ever something they were interested in.Permalink On twitter.com
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An always great moorehn thread that pairs well with this one - moorehn/1518925753596973057On twitter.com
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