A group of banks is reportedly preparing to sell as much as US$3 billion (A$4.8 billion) of senior debt from Elon Musk’s purchase of Twitter, now known as X.
Morgan Stanley has contacted investors ahead of a sale next week, according to the Wall Street Journal. Morgan Stanley, as well as others like Barclays and Bank of America, lent Musk US$13 billion to complete the Twitter sale in 2022.
“Our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even,” Musk reportedly told X staff in an email this month.
Musk denied that the platform was struggling financially. “This report is false. I sent no such email,” he said. “WSJ is lying.”
The banks have already sold about US$1 billion in X debt, and aim to sell the next installment of debt at 90-95 cents on the dollar. These loans were priced as low as 60 cents on the dollar in November 2022.
Banks wrote down US$10 billion in X's loans by up to 20% at the end of 2022.
Investors will be offered a claim on X’s interest in xAI, totalling US$6 billion, according to Bloomberg.
xAI, Musk’s AI company, raised $6 billion in a December funding round, and is valued at $40 billion to $50 billion. Its flagship product, a chatbot known as Grok, is available through X.
Musk closed his acquisition of Twitter for US$44 billion in October 2022, after first agreeing to do so in April. While the company is now privately held, investors like Fidelity now value their stakes in X at significantly less than before Musk’s purchase.
