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Elon Musk’s Twitter Pitch Featured Job And Price Cuts, Methods To Make Cash: Report

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Elon Musk's Twitter Pitch Featured Job And Cost Cuts, Ways To Make Money

Elon Musk made the pitch to the lenders as he tried to safe debt for the buyout.

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

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

Musk needed to persuade the banks that Twitter produced sufficient money circulation to service the debt he sought. Ultimately, 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 reasonably than agency commitments, the sources mentioned, and the precise value 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 value financial savings. Twitter’s stock-based compensation for the 12 months ending Dec. 31, 2021 was $630 million, a 33% enhance from 2020, company filings present.

In his pitch to the banks, Musk additionally pointed to Twitter’s gross margin, which is far decrease than friends reminiscent of Meta Platform Inc’s Fb and Pinterest, arguing this leaves loads of house to run the corporate in a extra cost-efficient method.

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

Bloomberg Information reported earlier on Thursday that Musk particularly talked about job cuts as a part of his pitch to the banks. One of many sources mentioned that Musk won’t make selections on job cuts till he assumes possession of the corporate later this 12 months. He went forward with the acquisition with out gaining access to confidential particulars on the corporate’s monetary efficiency and headcount.

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

Concepts he introduced up included charging a payment 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 recommended a raft of modifications to the social media large’s Twitter Blue premium subscription service, together with slashing its value, 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 decreased Twitter’s dependence on promoting for a lot of its income.

Musk, whose internet price is pegged by Forbes at $246 billion, has indicated he’ll assist the banks in advertising and marketing the syndicated debt to buyers, 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 govt for Twitter, one of many sources added, declining to call the identification of that individual.

TOO RISKY FOR SOME BANKS

The Tesla Inc chief govt additionally instructed the banks he’ll search moderation insurance policies on the social media platform which can be as free as attainable throughout the authorized constraints of every jurisdiction Twitter operates, the sources mentioned, a place that Musk 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 excuse 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, in response to the sources.

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

(Reporting by Krystal Hu in New York and Anirban Sen in Bengaluru; Modifying by Greg Roumeliotis and Sam Holmes)

(This story has not been edited by NDTV workers and is auto-generated from a syndicated feed.)

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