Chaos reigns not only on but also on Twitter. That doesn’t stop at Elon Musk’s partners either. Banks want to get rid of loans at high discounts.
Banks that helped Elon Musk take over Twitter are apparently trying to pass the debt on to investors, accepting discounts of up to 30 percent. However, interested parties demanded 40 percent, reports the financial news agency Bloomberg and explains that it would be the highest such discount in ten years. This underscores the difficult position the banks have put themselves in funding Musk’s Twitter takeover.
At the same time, there are increasing fears that Twitter could come to an end. Internally, Elon Musk has already warned of bankruptcy. At the same time, the company is apparently heading for a conflict with the US competition authority FTC. Twitter could not only face billions in fines, but Twitter employees could even face prison sentences in the worst case, according to US media.
Banks are preparing for billions in losses
Elon Musk is still considered the richest person in the world, but he was supported by several major banks in financing the Twitter takeover. A total of seven around Morgan Stanley, Bank of America, Barclays, and Mitsubishi UFJ Financial Group have taken a total of about $13 billion. The banks’ plan was apparently to dump at least part of the debt on the credit market in the short term. Since then, however, he has come under pressure.
According to the Bloomberg report, banks are now offering half of the loans to potential investors. Even if they can sell them at the desired discounts of 30 percent instead of 40 percent, the overall loss will be billions. In addition, there are losses that are incurred on the remaining loans simply because of the interest rate increases in recent months.
The mood on Twitter is depressed. Internally, the new Twitter boss has already admitted a massive loss in sales in the past few days. That’s why he had to sell Tesla shares worth four billion US dollars. New financial worries could be added to the current ones should a conflict with the FTC arise. Twitter agreed to stricter supervision and stricter controls with them more than ten years ago, and the agreement was renewed at the beginning of the year.
“Elon is not afraid of the FTC”
Failure to comply can result in Twitter being subject to severe fines, but according to Techdirt, Twitter employees may even face jail time. This is probably one of the reasons why Twitter lost more high-ranking employees on Thursday. According to The Verge, the current head of the legal department has internally assured: “Elon puts rockets into space, he is not afraid of the FTC”.
The regulator has already expressed its “deep concern”: “No CEO or company is above the law,” said a senior FTC executive. Among other things, the FTC had instructed Twitter to check new products for security and data protection before they were introduced. According to US media reports, Musk assured in an internal email that Twitter would do everything possible to meet the authority’s requirements.