Elon Musk is in talks with potential investors about raising up to $3 billion to repay some of the $13 billion loan he took out last year to fund the acquisition of Twitter, the Wall Street Journal reported today (Jan. 26), confirming earlier reports the social media company faces a cash crunch to finance its debt.
Musk’s team has explored options including selling up to $3 billion in new Twitter shares to pay off a high-interest, unsecured portion of the debt, according to the Journal. That part of the loan carries an interest rate of 10 percent plus the secured overnight financing rate, a benchmark interest rate that has recently shot up to 4.3 percent, the Journal reported.
Musk hasn’t found any buyers yet, it seems. In December, his team reached out to new and existing investors about selling new Twitter shares at the original takeover price of $54.20 per share, a price some analysts say are too high for Twitter’s actual worth today. Some potential investors balked at the terms over concerns about Twitter’s financial performance, the Journal reported.
Twitter’s first interest payment of the $13 billion loan is due this month, the Financial Times reported last week. But lenders, including Morgan Stanley, Bank of America, Barclays and Mitsubishi, haven’t received any payments, according to the Journal.
