- After canceling the twitter deal, it is now suddenly back on track.
- Twitter issued a news article regarding how Musk parties have already filled an SEC.“Everybody wants Elon Musk to be forced to buy Twitter but nobody wants him to actually buy Twitter, Quite the paradox,” a user on Twitter wrote.
- Some users even mocked him by saying that he is creating unnecessary drama to distract himself and that twitter should be owned by its worst user.
The Real Pressure
The twitter deal Proposed by Elon Musk of buying it for $54.20 a share would dangerously increase the burden of interest on the social media giant and would even drive up leverage to nearly nine times of the adjusted earnings, amidst the rising costs of borrowing this year.
“The most recent funding plan of Mr. Musk includes $33.5 billion in equity and $13 billion in debts. Twitter Interest burden will rise to around $850 million annually from $51 million in 2021, Which is way more than half of the company’s adjusted annual earnings. The estimated Leverage will also increase upto nine times due to this new funding plan.” Says the analysts.
Rising Interest rates
Twitter already has some planned buyout debts in floating rate, and as the Federal Reserve has raised its rates this year and are expected to raise more in November Twitter could end up paying more than what it bargained for.
Test of Investment Banks
Investment banks like Morgan Stanley, Barclays, etc. who signed commitment letter at lower interest rates to fund the buyout earlier this year have to give a major test
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