A consortium of seven lenders led by Morgan Stanley (NYSE: MS) is left with a $12.5 billion debt from Elon Musk’s $44 billion takeover of Twitter, now known as X, according to a recent report from Bloomberg.
Conversations between the banks and Musk’s team, which occurred earlier in the year but “faltered” according to the outlet, were aimed at restructuring the debt to ease the financial burden and mitigate risk for the banks involved. The initiative sought to lower the debt’s cost and secure a safer investment framework for the lenders.
The consortium has held the sizeable debt since 2022. They have collectively decided against selling their debt individually, opting instead for a joint sale when X demonstrates a more robust economic performance. This strategy hinges on anticipated improvements in advertising revenue, subscription numbers, and the success of a forthcoming peer-to-peer payment system. As to when that will be — well, it is all still unclear.
Morgan Stanley, the principal financier, contributed over a quarter of the entire debt package, resulting in significant financial losses in 2022. However, reports suggest a reduction in such losses in 2023, although specific details were not disclosed.
Additionally, Fidelity, which acquired a share in X following Musk’s $44 billion purchase, has devalued its investment by 72% post-acquisition.
Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
