Twitter Begins Paying Interest on Its Massive Debt

Twitter has reportedly made its first interest payment on its pending debt of more than $12.5 billion by Bloomberg and the Financial Times. Elon Musk took out billions in loans as part of the billionaire back in October 2022 successful attempt to buy Twitter and take the social media platform private. And through that $44 billion acquisition deal, the nearly $13 billion in debt became Twitter’s responsibility.

According to Bloomberg, the initial interest payment, which is due and believed to have been paid on Friday, is expected to cost the company an estimated $300 million. Twitter reportedly paid that amount to seven banks, led by Morgan Stanley, which initially provided the acquisition funds.

That the company is making its first interest payment on time bodes well, or rather, it’s better than the alternative. But that initial $300 million isn’t enough to pay off the immense sum owed. After previous Bloomberg calculations, Twitter has to pay about $1 billion in debt every year to keep up. Annual interest alone could top $1.2 billion, Bloomberg reported on Monday. In contrast, before Musk, the company paid about $100 million in annual interest.

But even before Musk took over, Twitter was struggling financially. The company only had a profitable year (2019) in its almost ten-year existence as a public limited company. And under the leadership of the world’s second richest man, Twitter’s finances seem even less sustainable. The company has lost a big chunk of its ad revenue as advertisers continue to be put off into action by Musk’s “free speech” principles. Then of course there is the debt.

Musk told employees in November that Twitter could go bankrupt.

In apparent attempts to deal with this financial distress, the company didn’t pay rent at at least three of its offices, including its San Francisco headquarters, for months. Twitter has also resorted to selling off office furniture and more item at auction. The company has further laid off more than the half its employees in the last three months and reduced benefits for those who stay.

Musk has claimed that the above measures work. In a Twitter Spaces presentation in late December, the billionaire said that the company was on the way to be “approximately” balanced.

More recently, however, the Twitter/Tesla/SpaceX CEO has reportedly floated the idea Sold for $3 billion of his Twitter shares to raise funds – suggesting there may be more turmoil ahead for the Vogel app.