Home Technology Musk advised banks he’ll rein in Twitter pay, earn a living from tweets

Musk advised banks he’ll rein in Twitter pay, earn a living from tweets

Musk advised banks he’ll rein in Twitter pay, earn a living from tweets

Elon Musk advised banks that agreed to assist fund his $44 billion acquisition of Twitter that he may crack down on government and board pay on the social media firm in a push to slash prices, and would develop new methods to monetize tweets, three individuals acquainted with the matter mentioned.

Musk made the pitch to the lenders as he tried to safe debt for the buyout days after submitting his provide to Twitter on April 14, the sources mentioned. His submission of financial institution commitments on April 21 have been key to Twitter’s board accepting his “best and final” provide.

Musk needed to persuade the banks that Twitter produced sufficient money stream to service the debt he sought. In the top, he clinched $13 billion in loans secured towards Twitter and a $12.5 billion margin mortgage tied to his Tesla inventory. He agreed to pay for the rest of the consideration together with his personal money.

Musk’s pitch to the banks constituted his imaginative and prescient relatively than agency commitments, the sources mentioned, and the precise price cuts he’ll pursue as soon as he owns Twitter stay unclear. The plan he outlined to banks was skinny on element, the sources added.

Musk has tweeted about eliminating the salaries of Twitter’s board administrators, which he mentioned may end in about $3 million in price financial savings. Twitter’s stock-based compensation for the 12 months ending Dec. 31, 2021 was $630 million, a 33% improve from 2020, company filings present.

In his pitch to the banks, Musk additionally pointed to Twitter’s gross margin, which is way decrease than friends corresponding to Meta Platforms’s Facebook and Pinterest, arguing this leaves loads of area to run the corporate in a extra cost-efficient means.

The sources requested anonymity as a result of the matter is confidential. A Musk consultant declined to remark.

Bloomberg News reported earlier on Thursday that Musk particularly talked about job cuts as a part of his pitch to the banks. One of the sources mentioned that Musk won’t make selections on job cuts till he assumes possession of the corporate later this yr. He went forward with the acquisition with out accessing confidential particulars on the corporate’s monetary efficiency and headcount.

Musk advised the banks he additionally plans to develop options to develop enterprise income, together with new methods to earn a living out of tweets that comprise essential data or go viral, the sources mentioned.

Ideas he introduced up included charging a charge when a third-party web site desires to cite or embed a tweet from verified people or organizations.

In a tweet earlier this month he subsequently deleted, Musk steered a raft of adjustments to the social media big’s Twitter Blue premium subscription service, together with slashing its worth, banning promoting and giving an choice to pay within the cryptocurrency dogecoin. Twitter’s premium Blue service now prices $2.99 a month.

In one other tweet he deleted, Musk mentioned he desires to scale back Twitter’s dependence on promoting for a lot of its income.

Musk, whose internet value is pegged by Forbes at $246 billion, has indicated he’ll help the banks in advertising and marketing the syndicated debt to traders, and that he could unveil extra particulars of his marketing strategy for Twitter then, the sources mentioned.

Musk has additionally lined a up a brand new chief government for Twitter, one of many sources added, declining to disclose the identification of that individual. He advised Twitter’s chairman Bret Taylor earlier this month that he doesn’t trust within the San Francisco-based firm’s administration. Parag Agrawal, who was named Twitter’s chief government in November, is predicted to stay in his function till the sale of the corporate to Musk is accomplished.

Musk has been inundated with gives from potential fairness companions to hitch him within the Twitter deal, and he’ll resolve within the coming weeks if he groups up with somebody, one of many sources mentioned. It is unlikely that Musk would companion with a non-public fairness agency provided that the deal shouldn’t be structured as a conventional leveraged buyout, the supply added.

Musk disclosed this week that he offered $8.5 billion value of Tesla shares, a transfer probably geared toward serving to finance his deal for Twitter.

The Tesla chief government additionally advised the banks he’ll search moderation insurance policies on the social media platform which might be as free as attainable throughout the authorized constraints of every jurisdiction Twitter operates, the sources mentioned, a place that he has repeated publicly.

The $13 billion Twitter mortgage is equal to seven instances Twitter’s 2022 projected earnings earlier than curiosity, taxes, depreciation and amortization. This was too dangerous for some banks who determined to take part solely within the margin mortgage, the sources mentioned.

Another motive some banks opted out is as a result of they feared Musk’s unpredictability may end in an exodus of expertise from Twitter, harming its enterprise, based on the sources.

A Twitter spokesperson didn’t reply to a request for remark.



Please enter your comment!
Please enter your name here