Elon Musk’s new news: Twitter is due to pay interest on a $13 billion loan…and is likely to file for bankruptcy

“I don’t care about economic benefits” is the statement that billionaire Elon Musk eloquently declared in April 2022 when referring to the acquisition of Twitter. However, when he was about to close this $44 billion deal, the Tesla founder understood that he couldn’t sell off or mortgage the shares of electric car company Tesla just to have enough money to buy Twitter.

Therefore, Elon Musk had to send loan requests to banks with a total loan amount of up to 13 billion USD. The banks then transferred the money to an escrow account after finalizing contract details, according to the Wall Street Journal.

Analysts say that Elon Musk does not seem to care too much about Twitter’s basic profit, but focuses more on freedom of speech and content censorship on this social networking platform.

But the interest payment day has finally come. A recent report by the Financial Times said that billionaire Elon Musk will have to pay the first interest and may have to pay it as early as this month. But with Twitter’s “fluctuating” financial situation, many people ask: Can Twitter pay this huge debt, or will it default and declare bankruptcy?

Because since billionaire Elon Musk took over, Twitter has lost more than 4 million USD per day. Besides, Twitter is also not a strong social network in terms of monetization even though it is a globally famous platform. According to Quartz, in the 9 years since listing on the stock exchange, Twitter has only reported profits for the only two fiscal years in 2018 and 2019 with a figure of more than 1 billion USD.

Therefore, the solutions to pay the debt of more than VND 300 million billion that Elon Musk will have to consider is to sell more Tesla shares or start bankruptcy proceedings for this social network.

Musk bought Twitter for $44 billion with a $13 billion loan from banks Morgan Stanley and Bank of America. And in fact, the “debtor” of this deal is Twitter, not the billionaire personally. Twitter will have to pay about $1.5 billion a year in interest, according to the Financial Times.

If Twitter fails to make that payment, the social network’s administration can file for bankruptcy to begin the debt restructuring process. Twitter lost $221 million in 2021. To fix it, the new CEO has been trying to cut costs and increase revenue since buying the company.

He also laid off about 50% of employees, about 7,500 employees to cut costs and launched a new Twitter Blue subscription service. This Twitter user verification service will provide green ticks to all participants of this social network for 8 USD / month (about 200,000 VND) on the Twitter iOS app.

New features introduced in this version include: Green tick used to verify with all users, limit inappropriate ads, post longer videos or prioritize quality content. . He also maintains advertising revenue in the short term, but in the long term will look for another source of revenue for Twitter.

However, Musk himself has repeatedly said that Twitter’s financial situation is in trouble and “insinuated” that the company is likely to file for bankruptcy. But the story of Twitter really can not pay interest and default or not is still a mystery. New information will continue to be updated.

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