"Never bet against Elon": last loans from Twitter takeover sold
Less than a year ago, the banks involved in the Twitter takeover assumed that it was a huge loss-making business. That was not true.
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The banks that financed Elon Musk's Twitter takeover have sold the latest loans at almost no discount. This was reported by the Wall Street Journal, which added that the 1.2 billion US dollar loans were sold for 98 percent of their original value. The fact that this was achieved despite the difficult situation on the financial markets underlines how great the interest was. For the banks, the sale was the successful conclusion of an unprecedented turnaround. Last summer, the underlying transaction was still considered the worst takeover since the financial crisis. Those who say “never bet against Elon Musk” are apparently right again, the newspaper quotes financial expert Steven Kaplan.
Unprecedented turnaround
The penultimate tranche of loans was even sold at par in mid-February. Previously, a package could be sold for 90 to 95 percent of its value. Meanwhile, some banks involved had assumed that their loans were only worth 65% of their nominal value. According to the Wall Street Journal, the turnaround was initiated by the AI company xAI, which is associated with the short messaging service. The more closely this was linked to the social network, which has since been renamed X, the more its value rose. The tide then turned completely with Donald Trump's election victory, which Elon Musk supported immensely.
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Musk took over Twitter in the fall of 2022 for 44 billion US dollars. Seven banks contributed 13 billion to the purchase price. Normally, such loans are sold on quickly, but the chaos at Twitter was such a deterrent that they would only have received 60 percent of the money meanwhile. At the turn of the year, the loans would only have been sold at a loss of 10 to 20 percent. Considering Elon Musk's role in the US government, some investors are probably hoping to benefit from an investment, while others apparently see a brighter future for X and xAI. According to the report, the combined company is now seeking 20 billion US dollars in capital and would then be worth 113 billion.
(mho)
