Twitter will take on significant amounts of debt as part of its deal to go private, exposing the company to rising interest rates
Mr. Musk may pay the margin loan out of his own account, or Twitter may use cash from the business to cover the interest expense. Twitter and Mr. Musk didn’t immediately respond to requests for comment. Morgan Stanley, Bank of America and Barclays declined to comment. MUFG didn’t immediately respond to a request for comment.
At present, Twitter has a little more than $5 billion in debt, mostly in the form of low-interest convertible bonds and unsecured debt, according to a recent offering memorandum. If shareholders agree to take Twitter private, the company will need to pay back all of its existing debt before this new debt is added to its books, analysts said. The company’s bond prices have rallied on news of Mr. Musk’s planned buyout to around 102 cents on the dollar.
Twitter has been striving to build out its advertising revenue under CEO Parag Agrawal, but it is unclear if that vision will continue.
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