Elon Musk is mulling over ways to whittle down some of his Twitter debt
Good morning. I'm Phil Rosen, reporting from Los Angeles.
The good weather here has left me postponing my return to wintry New York. After weeks of sunshine, a few seconds of Manhattan air just might give me frostbite at this point.
And speaking of cold hard reality, the Wall Street Journal reported that Elon Musk is trying to raise fresh funds to pay off some of the pricier bits of his $13 billion Twitter loan.
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1. New fundraising to the tune of $3 billion could help Musk repay the obligations he took on in his Twitter takeover.
Sources told the Wall Street Journal yesterday that the Chief Twit's team has been exploring options for an equity raise that could be used to pay down the most expensive slice of the $13 billion debt.
Twitter's unsecured bridge loans, which total about $3 billion, carry a 10% interest rate in addition to the secured overnight financing rate, which has soared in recent months.
For every quarter that goes by without refinancing, the interest rate goes up by an additional 0.50 percentage point, regulatory filings show.
That said, if Twitter can pay back those unsecured bridge loans, meeting its debt obligations would be much more manageable.
Still, there's no guarantee that fundraising comes through, as investors remain wary of Twitter's ability to generate cash-flow.
In December, former credit analyst Jeffrey Davies predicted that Twitter's total interest expense is roughly $1.25 billion per year. That comes out to just about $3.4 million per day in interest payments.
Musk predicted in December that Twitter's business will break even in 2023 thanks to cost-cutting measures (including letting go of some 6,000 staffers).
Remember, it's been four years since Twitter notched an annual profit, and it's posted a loss in eight of the last 10 years.
Musk knowingly took on a sinking ship, and securing more investors to help him do so will play a key role in how his social media gambit plays out.
What are some ways you think Elon Musk could boost revenue at Twitter? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.
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Curated by Phil Rosen in Los Angeles. Feedback or tips? Tweet @philrosenn or email prosen@insider.com
Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.