CrazyMyraJul 1, 2023
Let me start the Sunday sermon by saying I have no idea if this will work out for Musk. It's what I think is going on atm.
Also, the decision to only allow tweets to be read from within the app and the huge rate-limiting snafu that's happening are independent, though the first probably caused the second because of staff shortages. The second part can be - and probably soon will be - fixed enough to keep most users. The first part of the equation isn't going to change. Definitely not until different conditions are met.
But before getting into this week's drama, let me recap what Twitter is now.
Show threadCrazyMyraJul 1, 2023
The sale price was $44bn, but Musk only paid between $17.5bn and $18.5bn in that part of the deal. I round it up to $20bn not because "what's a couple of billion between friends", but because he already owned 4.9% of the company (bought at a lower price), so the total bill for the 75% of Twitter he now owns was $20bn.
It is crucial to remember that he has already paid this. It is gone. He has no personal outstanding obligations in connection with any debt connected to Twitter. Not as a shareholder, not as the CEO of X Corp.
And he has no reason to put in another cent.
Show threadCrazyMyraJul 1, 2023

The remaining 25% of the stock is divided among two groups: tech billionaires like Larry Ellison and Jack Dorsey, who rolled over their shares, and Gulf money - mainly from Saudi Arabia and Qatar. The Saudis are the biggest shareholders behind Musk.
Combined, these two groups paid (in cash or rollover) about $10bn-$12bn.

The "missing" $12bn+ is what this week's developments are about. It's the loans - held by big US banks - that Twitter took out on itself to buy itself. This is what a leveraged buyout means. If you know UK football, this is what the Glazers did to Manchester United.

Show threadCrazyMyraJul 1, 2023
I say again: this is not debt that Elon Musk is responsible for. It is Twitter's debt.
And, to get all technical on you, Twitter has almost no fixed assets (like property that can be seized), so much of that debt is unsecured. If Twitter dies, the banks will have a $12bn flaming crater in their books.
If they weren't all capitalist eejits, they'd pull the plug now and take the pain.
I think Musk is betting they won't.
What he's trying to do is either get the loans discreetly restructured, or take Twitter into bankruptcy. Neither of these paths requires any more money from any of the shareholders or the closure of Twitter.
Show threadCrazyMyraJul 1, 2023

So, why is he taking this route?

You'll see that if you try to read Twitter, you get 3 login options:
Apple
Google
Twitter
That's not a random choice. It's the 3 ways for users to pay for $8kun. And there's the fact that Google and Apple are way out ahead in the LLM stakes. He's offering privileged access.

People are making a great deal about how Twitter can't pay its Cloud bills. It sounds awfully like the stuff we heard about not paying rent.
Two of the big rent stories were a Boulder office and Twitter HQ. Rod Hilton (@/[email protected]) did an excellent thread about the Colorado situation. It was a location never used by Twitter, and being evicted was cheaper than buying itself out of a long lease.
The San Francisco rent issue evaporated when the entire building was mysteriously refinanced.
Musk doesn't care about his credit score. He's the richest person in the world. As long as he can "legally" get out of contracts, he is happy to entertain any method.

Show threadCrazyMyraJul 1, 2023

So when it comes time for Twitter to pay some other big bills, Musk is going to look at his options. They are probably variants/combinations of:
1. That partnership of sorts with Apple/Google that gives only them access to the "training data" of users.
2. Twitter files for bankruptcy.

This leaves the banks in a pickle, because - either way - they're not getting back the total and are probably not even getting the amounts they should on regular debt-servicing.
But, being banks, they're also likely to refinance the loans. This is how banks get into shit, and they never learn because governments bail them out.

Show threadÁngela Stella Matutina

@OutOnTheMoors

Chapter 11 is the way for a grifter like Musk.

Jul 1, 2023 at 11:53pmWeb
Show threadCrazyMyraJul 1, 2023
@angelastella Absolutely