Musk Pursues $3 Billion Funding to Repay Twitter Debt

[Asia Economy New York=Special Correspondent Joselgina] Elon Musk, CEO of Tesla, is reportedly seeking to raise up to $3 billion (approximately 3.7 trillion KRW) to repay Twitter's debt. However, Musk drew a line when asked if the report was true, responding "No."

[Image source=AP Yonhap News]

The Wall Street Journal (WSJ) reported on the 25th (local time), citing sources, that Musk's side is discussing a $3 billion capital increase for Twitter to repay part of the $13 billion in new debt incurred during the acquisition process.

Musk's side plans to reduce interest burden by repaying some of Twitter's highest-interest debt through this. Twitter's debt was around $5 billion but surged to $18.5 billion after Musk's acquisition.

If successful in repaying part of the debt, it is expected to help Twitter's management and cash flow, which have been struggling due to recent recession concerns and rapid advertiser departures. Earlier, Musk mentioned the possibility of bankruptcy, revealing that Twitter was recording losses exceeding $4 million per day due to a large drop in revenue.

WSJ reported that some of Twitter's debt carries an additional 10% premium on top of a benchmark interest rate in the 4% range. Annual interest expenses have soared by over $100 million since the acquisition announcement in April last year.

According to an analysis by Jeffrey Davis in December last year, Twitter's annual interest payments are estimated to reach $1.25 billion. This means daily interest costs amount to $3.4 million. The outlet also added that in December last year, Musk warned through Twitter about the macroeconomic conditions shaken by the Federal Reserve's rate hikes, cautioning "beware of debt." It was essentially a warning to himself.

However, Musk flatly denied on Twitter that the WSJ article was accurate when asked about it on the same day.

This content was produced with the assistance of AI translation services.