Musk twitter9/2/2023 More than 60% of Musk’s remaining stake in Tesla has been pledged “to secure certain personal indebtedness”, which leaves him with about $67bn worth of shares he can sell immediately, says Ben Silverman, director of research at VerityData. Last year, he sold $23bn worth of shares in Tesla, presumably to fund his part of the deal. To buy Twitter, Musk put in more than $20bn of his own money, alongside $7.1bn from associates and about $4bn from his existing stake in the company. “Longer term, the company needs to turn around the business, particularly its advertising revenue, in order to service its debt.” Can Musk fund Twitter from his personal fortune? “Twitter should have no problem making its interest payment in late January, which could be funded with cash on hand or its revolving credit facility,” says Jordan Chalfin, a senior analyst at the credit research firm CreditSights. He has also said Twitter has a net cash position of $1bn, which would at least cover next week’s payment along with the $500m overdraft. Musk told a podcast last month that Twitter is “not on the fast lane to bankruptcy any more”. Musk had warned that loss was heading towards $3bn this year but now expects it to break even. Its cashflow – a proxy of its ability to meet debt payments – is poor and in 2021 it generated negative free cashflow (spending more cash to run the business than it takes in) of $370.4m. It was reported last week that Twitter’s daily revenue has slumped by 40%. The advertising situation has not improved. He also revealed a sharp drop in advertising revenue, which accounts for 90% of Twitter’s turnover, caused by clients’ concern over moderation standards post-takeover and a botched relaunch of Twitter’s subscription service, which led to a rash of fake “verified” corporate accounts. Musk warned soon after taking over Twitter that the company could go bankrupt. Twitter also has a $500m senior secured revolving facility, which is effectively a corporate overdraft. The debt, which sits on Twitter’s balance sheet and is loaned by a consortium of banks led by Morgan Stanley, comprises: a $6.5bn senior secured term loan facility (a bank loan) a $3bn senior secured bridge loan facility (a loan to tide over the company post-acquisition that, conventionally, is paid off with the proceeds of a bond issue) and a $3bn senior unsecured bridge loan facility.
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