top of page
  • By The Financial District

Elon Musk To Sink In Red Ink As He Bankrupts Twitter

The bill for Elon Musk’s purchase of Twitter is coming due, with the billionaire facing unpalatable options on the company’s enormous debt pile, ranging from bankruptcy proceedings to another costly sale of Tesla shares, Tabby Kinder, Richard Waters and Eric Platt reported for the Financial Times.


Photo Insert: The company’s dire finances — it made a loss of $221 million in 2021 before the acquisition and Musk has said revenues have declined since — have led him to warn that Twitter could crash into bankruptcy.



Three people close to the entrepreneur’s buyout of Twitter said the first installment of interest payments related to $13 billion of debt he incurred to fund the takeover is due by the end of this month.


It means Twitter must pay about $1.5 billion in annual interest payments. The Tesla and SpaceX chief financed his $44 billion deal to take Twitter private in October by securing the huge debt from a syndicate of banks led by Morgan Stanley, Bank of America, Barclays, and Mitsubishi.



The $13 billion debt is held by Twitter at a corporate level, with no personal guarantee by Musk.


Since the takeover, Musk has raced to cut costs, like firing half the company’s staff, while seeking new revenue streams. The company’s dire finances — it made a loss of $221 million in 2021 before the acquisition and Musk has said revenues have declined since — have led him to warn that Twitter could crash into bankruptcy.


All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

How Musk deals with the looming interest payment is a crucial test of his leadership of Twitter, which he has eviscerated, and woo corporate advertisers who have dumped Twitter.


“This company is like you’re in a plane that is headed towards the ground at high speed with the engines on fire and the controls don’t work,” Musk said last month, without admitting that he was the pilot of that plane.


Business: Business men in suite and tie in a work meeting in the office located in the financial district.

If Twitter did not make its first interest payment, it would join a small but notorious club of companies dubbed “NCAA” by debt traders — short for “no coupon at all” — that includes US car rental company Hertz and German payments group Wirecard.


Such a default on its debt would probably result in Twitter’s management filing for bankruptcy, at which point the US courts would begin an expensive and bureaucratic debt restructuring process.


Banking & finance: Business man in suit and tie working on his laptop and holding his mobile phone in the office located in the financial district.

Musk could avoid this fate by settling the interest from Twitter’s dwindling cash reserves or selling more equity in the company to fund the payments — both painful options.


The business has a cash position of about $1 billion, Musk has said. He has also warned that its net cash outflow could be about $6 billion next year without additional cost-saving measures.



WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic



Optimize asset flow management and real-time inventory visibility with RFID tracking devices and custom cloud solutions.
Sweetmat disinfection mat

bottom of page