Elon Musk instructed banks that agreed to assist fund his $44 billion acquisition of Twitter Inc that he may crack down on government and board pay on the social media firm in a push to slash prices, and would develop new methods to monetise tweets, three individuals accustomed to the matter mentioned.

Musk made the pitch to the lenders as he tried to safe debt for the buyout days after submitting his provide to Twitter on April 14, the sources mentioned. His submission of financial institution commitments on April 21 have been key to Twitter’s board accepting his “best and final” provide.

Musk needed to persuade the banks that Twitter produced sufficient money circulation to service the debt he sought. In the top, he clinched $13 billion  (roughly Rs. 99,210 crore) in loans secured towards Twitter and a $12.5 billion (roughly Rs. 95,400 crore) margin mortgage tied to his Tesla inventory. He agreed to pay for the rest of the consideration along with his personal money.

Musk’s pitch to the banks constituted his imaginative and prescient slightly than agency commitments, the sources mentioned, and the precise value cuts he’ll pursue as soon as he owns Twitter stay unclear. The plan he outlined to banks was skinny on element, the sources added.

Musk has tweeted about eliminating the salaries of Twitter’s board administrators, which he mentioned may end in about $3 million (roughly Rs. 23 crore) in value financial savings. Twitter’s stock-based compensation for the 12 months ending December 31, 2021 was $630 million (roughly Rs. 4,810 crore), a 33 p.c enhance from 2020, company filings present.

In his pitch to the banks, Musk additionally pointed to Twitter’s gross margin, which is way decrease than friends similar to Meta’s Facebook and Pinterest, arguing this leaves loads of house to run the corporate in a extra cost-efficient means.

The sources requested anonymity as a result of the matter is confidential. A Musk consultant declined to remark.

Bloomberg News reported earlier on Thursday that Musk particularly talked about job cuts as a part of his pitch to the banks. One of the sources mentioned that Musk won’t make choices on job cuts till he assumes possession of the corporate later this 12 months. He went forward with the acquisition with out accessing confidential particulars on the corporate’s monetary efficiency and headcount.

Musk instructed the banks he additionally plans to develop options to develop enterprise income, together with new methods to make cash out of tweets that comprise necessary info or go viral, the sources mentioned.

Ideas he introduced up included charging a charge when a third-party web site desires to cite or embed a tweet from verified people or organisations.

In a tweet earlier this month he subsequently deleted, Musk steered a raft of modifications to the social media big’s Twitter Blue premium subscription service, together with slashing its value, banning promoting and giving an choice to pay within the cryptocurrency Dogecoin. Twitter’s premium Blue service now prices $2.99 (roughly Rs. 230) a month.

In one other tweet he deleted, Musk mentioned he desires to lowered Twitter’s dependence on promoting for a lot of its income.

Musk, whose internet price is pegged by Forbes at $246 billion (roughly Rs. 18,78,060 crore), has indicated he’ll assist the banks in advertising and marketing the syndicated debt to buyers, and that he could unveil extra particulars of his marketing strategy for Twitter then, the sources mentioned.

Musk has additionally lined a up a brand new chief government for Twitter, one of many sources added, declining to call the id of that particular person.

Too dangerous for some banks

The Tesla chief government additionally instructed the banks he’ll search moderation insurance policies on the social media platform which are as free as potential throughout the authorized constraints of every jurisdiction Twitter operates, the sources mentioned, a place that Musk has repeated publicly.

The $13 billion (roughly Rs. 99,260 crore) Twitter mortgage is equal to seven occasions Twitter’s 2022 projected earnings earlier than curiosity, taxes, depreciation, and amortisation. This was too dangerous for some banks who determined to take part solely within the margin mortgage, the sources mentioned.

Another cause some banks opted out is as a result of they feared Musk’s unpredictability may end in an exodus of expertise from Twitter, harming its enterprise, in keeping with the sources.

A Twitter spokesperson didn’t reply to a request for remark.

© Thomson Reuters 2022