div classBodysc17zpet90 cdBBJodivpBy Krystal Hu and Anirban Senp
pReuters – Elon Musk told banks that agreed to help fund his 44 billion acquisition of Twitter Inc that he could crack down on executive and board pay at the social media company in a push to slash costs, and would develop new ways to monetize tweets, three people familiar with the matter said.pdivdivdiv classBodysc17zpet90 cdBBJodiv
pMusk made the pitch to the lenders as he tried to secure debt for the buyout days after submitting his offer to Twitter on April 14, the sources said. His submission of bank commitments on April 21 were key to Twitters board accepting his “best and final” offer.p
pMusk had to convince the banks that Twitter produced enough cash flow to service the debt he sought. In the end, he clinched 13 billion in loans secured against Twitter and a 12.5 billion margin loan tied to his Tesla stock. He agreed to pay for the remainder of the consideration with his own cash.p
pMusks pitch to the banks constituted his vision rather than firm commitments, the sources said, and the exact cost cuts he will pursue once he owns Twitter remain unclear. The plan he outlined to banks was thin on detail, the sources added.p
pMusk has tweeted about eliminating the salaries of Twitter‘s board directors, which he said could result in about 3 million in cost savings. Twitter’s stockbased compensation for the 12 months ending Dec. 31, 2021 was 630 million, a 33 increase from 2020, corporate filings show.p
pIn his pitch to the banks, Musk also pointed to Twitter‘s gross margin, which is much lower than peers such as Meta Platform Inc’s Facebook and Pinterest, arguing this leaves plenty of space to run the company in a more costefficient way.p
pThe sources requested anonymity because the matter is confidential. A Musk representative declined to comment. p
pBloomberg News reported earlier on Thursday that Musk specifically mentioned job cuts as part of his pitch to the banks. One of the sources said that Musk will not make decisions on job cuts until he assumes ownership of the company later this year. He went ahead with the acquisition without having access to confidential details on the companys financial performance and headcount.p
pMusk told the banks he also plans to develop features to grow business revenue, including new ways to make money out of tweets that contain important information or go viral, the sources said. p
pIdeas he brought up included charging a fee when a thirdparty website wants to quote or embed a tweet from verified individuals or organizations.p
pIn a tweet earlier this month he subsequently deleted, Musk suggested a raft of changes to the social media giant‘s Twitter Blue premium subscription service, including slashing its price, banning advertising and giving an option to pay in the cryptocurrency dogecoin. Twitter’s premium Blue service now costs 2.99 a month.p
pIn another tweet he deleted, Musk said he wants to reduced Twitters dependence on advertising for much of its revenue.p
pMusk, whose net worth is pegged by Forbes at 246 billion, has indicated he will support the banks in marketing the syndicated debt to investors, and that he may unveil more details of his business plan for Twitter then, the sources said.p
pMusk has also lined a up a new chief executive for Twitter, one of the sources added, declining to name the identity of that person.p
pTOO RISKY FOR SOME BANKSp
pThe Tesla Inc chief executive also told the banks he will seek moderation policies on the social media platform that are as free as possible within the legal constraints of each jurisdiction Twitter operates, the sources said, a position that Musk has repeated publicly.p
pThe 13 billion Twitter loan is equivalent to seven times Twitters 2022 projected earnings before interest, taxes, depreciation and amortization. This was too risky for some banks who decided to participate only in the margin loan, the sources said.p
pAnother reason some banks opted out is because they feared Musks unpredictability could result in an exodus of talent from Twitter, harming its business, according to the sources.p
pA Twitter spokesperson did not respond to a request for comment.p
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pp Reporting by Krystal Hu in New York and Anirban Sen in Bengaluru Editing by Greg Roumeliotis and Sam Holmesp
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