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Speaker 1: Just getting a little bit of breaking news on the

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Speaker 1: terminal at the moment from Twitter giving more control to

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Speaker 1: companies over ad placement. This is according to a report

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Speaker 1: from Reuter's. So Twitter very much in the headlines at

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Speaker 1: the moment. We're also being told that Elon Musk's bankers

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Speaker 1: are considering providing him with new margin loans backed by

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Speaker 1: Tesla Stock. And this is to replace some of the

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Speaker 1: high interest depth that he's lay it on Twitter. Joining

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Speaker 1: us to talk about this some more, We've got Daviday Shalutzo.

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Speaker 1: He's at Bloomberg, Senior editor, Davaday. So we've got Musks

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Speaker 1: bankers now considering replacing some of this high interest debt

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Speaker 1: on Twitter new loans to be backed by Tesla Stock.

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Speaker 1: Or reading between the lines, what does this tell us

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Speaker 1: about Twitter's financial state right now? Yeah, thanks for having me.

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Speaker 1: So you may remember there is about billion of debt

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Speaker 1: that was put on Twitter to finance Masks acquisition. Now

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Speaker 1: some of that Dad particularly, there was a three billion

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Speaker 1: piece of it which is unsecure. It pays a very

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Speaker 1: high interest rate, it's eleven seventy. So the idea is

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Speaker 1: to try to soften the burden that this represents for

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Speaker 1: Twitter as a company going forward, particularly as I go

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Speaker 1: through the transformation that Musk is engineering, and um, replace

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Speaker 1: it with lower cost debt that Musk would take on

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Speaker 1: a personal basis against this Tesla stock which is still

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Speaker 1: very valuable. So a couple of issues here. First, correct

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Speaker 1: me if I'm wrong. Is that coupon on that that

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Speaker 1: unsecured debt near twelve percent? That's a big number, that's right.

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Speaker 1: That's it's the most expensive piece in the entire structure.

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Speaker 1: And yes, it is very high. It's eleven seventy UM.

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Speaker 1: And so you know, when you think about companies financing

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Speaker 1: themselves in the public markets, this was supposed to be

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Speaker 1: taken out by Hi your bonds. That's almost as high

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Speaker 1: as it gets. So it's estimated that for Twitter, together

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Speaker 1: with all other pieces, this adds up to an interest

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Speaker 1: expense at one point two billion per year, and that

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Speaker 1: would be more than their earnings for all of of course,

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Speaker 1: Musk has been you know, cutting costs in various ways, um,

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Speaker 1: and there are other ways to make that burden more sustainable,

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Speaker 1: but obviously that's you know, if you were to think

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Speaker 1: about where to start, that's the PC you want to

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Speaker 1: attack first. Yeah, that's an extraordinary interest bill that you

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Speaker 1: just mentioned. There are we getting any signs that Elon

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Speaker 1: Musk has maybe suffering from some biased remorse when it

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Speaker 1: comes to Twitter, I mean, it's it's ordered the past

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Speaker 1: several months, I guess his has made it pretty clear that, uh,

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Speaker 1: maybe he doesn't regret the acquisition itself, but the price

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Speaker 1: tag he paid for it um has definitely been a

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Speaker 1: way too expensive compared to what's happened to Twitter and

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Speaker 1: other text stalks over the past several months. So you

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Speaker 1: could argue we kind of agreed to this price um

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Speaker 1: in a very differ from the world he tried to

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Speaker 1: back away from. It wasn't successful. The debt that's there

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Speaker 1: and the cost of that debt kind of reflects that

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Speaker 1: old reality that he probably is not so comfortable with anymore.

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Speaker 1: And same, by the way, for the banks that agreed

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Speaker 1: to finance the deal and that are still on the hook.

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Speaker 1: This debt is still sitting on their books. Well, if

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Speaker 1: his a t M is Tesla stock and I'm a

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Speaker 1: Tesla shareholder, I'm a little worried here, shouldn't I be?

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Speaker 1: That's right? I think that's a concern that a lot

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Speaker 1: of Tesla shareholders share and I guess there's two parts

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Speaker 1: to that concern. One is very material. If he takes

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Speaker 1: loans backed by Tesla stock, there is an increased likelihood

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Speaker 1: that if something happens in the future, he may have

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Speaker 1: to sell more stock, and that obviously would put downward

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Speaker 1: pressure on the price of the stock. There is also

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Speaker 1: a concern that you know, Twitter is just taking so

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Speaker 1: much of his time and energy at the moment that

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Speaker 1: he has uh, you know, they won't of as much

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Speaker 1: to dedicate to test Ala the company, which is going

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Speaker 1: through its own issues UM, and that you know, we'll

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Speaker 1: need a CEOs full attention, especially next year when they're

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Speaker 1: preparing to launch new products, and you know, I have

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Speaker 1: a very aggressive growth strategy. What's the chance that we

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Speaker 1: might see Twitter for sale again sometimes soon? I think

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Speaker 1: that remains it's a very difficult question to answer, partly

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Speaker 1: because I think you first need to figure out what

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Speaker 1: Twitter is gonna look like as a company, UM, even

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Speaker 1: in the near term, before anyone UM gets close to

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Speaker 1: it as a potential buyer. I mean, even the debt

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Speaker 1: that the banks are are holding is very hard to

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Speaker 1: sell at the moment because it's very hard to convince

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Speaker 1: investors in the credit markets about what what what kind

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Speaker 1: of company Twitter is today? What's its business model, where

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Speaker 1: does it get its money, whether it has advertisers on board,

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Speaker 1: and whether it is on a sustainable financial path. So

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Speaker 1: to sell the entire company again, I think it would

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Speaker 1: require even more steps and even more of a proven

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Speaker 1: track record under under Mosque's leadership. All right, davidad thanks

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Speaker 1: for unpacking all of that forest. Daviday Shalutz Bloomberg senior

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Speaker 1: editor there who has been covering the ongoing debt troubles

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Speaker 1: at Twitter and how they may be remedied