13 billion dollars

Loans for Musk’s Twitter purchase a bad deal

Musk bought Twitter in October 2022 for around 44 billion dollars.

(Bild: APA/dpa/Monika Skolimowska)

The loans of around 13 billion dollars that banks gave Elon Musk for the purchase of Twitter are apparently a bad deal for them so far. Normally, banks are quick to pass on such debts to other investors, but in this case they were left holding the bag.

The reason, reported the Wall Street Journal, was that they would only have been able to get rid of them at a high discount given the weak financial situation of the online service. As a result, write-downs on the value of the loans are now impacting the banks' balance sheets. In one case, this even had consequences for the remuneration of the responsible department, according to people involved.

Musk bought Twitter in October 2022 for around 44 billion dollars. He raised the majority of the sum by selling shares in the electric car manufacturer Tesla, which he manages. At the same time, he received loans from seven banks, including top names such as Morgan Stanley and Bank of America.

High interest rates weigh on X
One advantage of the situation for the banks could ultimately be that Musk repays the loans to them in full. In the meantime, they collect high interest rates - which in turn weigh on the online service, which is struggling to make money. The short message service, which Musk has since renamed X, is struggling with the flight of major advertising customers. They fear for their image.

Last year, hate speech researchers demonstrated how advertising from well-known brands can appear alongside anti-Semitic posts and posts from Nazi sympathizers, among other things. X denied that this is an everyday occurrence and sued the researchers - so far unsuccessfully. Most recently, X also dragged renegade advertisers to court, accusing them of colluding to keep advertising money away from the online service.