According to a Financial Times report citing three people familiar with the subject, Elon Musk could face the first interest payment on the debt he took on to buy Twitter as early as this month.
Given Twitter’s high amount of indebtedness, the world’s second-richest man may have to consider selling more Tesla shares to fund the payments – or possibly declaring bankruptcy for the faltering social media business, according to the newspaper.
Musk paid $44 billion for Twitter in October, with $13 billion borrowed from banks like Morgan Stanley and Bank of America.
According to the Financial Times, the debt is owned by Twitter rather than Musk personally, and the corporation is obligated to pay back about $1.5 billion every year in interest payments.
If Twitter fails to make that payment, its management may declare bankruptcy in order to begin the debt restructuring process.
Musk could avoid bankruptcy by selling more Tesla stock, which he has already done for almost $40 billion to help finance the takeover, or by using Twitter’s limited cash reserves to pay off the debt.
Twitter lost $221 million in 2021, its final full year of reporting. Since purchasing the company, Musk has pushed to cut costs and increase revenue, cutting off about half of the workforce and establishing a new subscription service called Twitter Blue.
