Elon Musk’s deal to take Twitter Inc. private for $54.20 a share would increase the social-media company’s interest burden and drive leverage up to nearly nine times adjusted earnings, given the rising costs of borrowing this year and the billions in debt needed to fund the transaction.
Mr. Musk’s most recent funding plan includes $33.5 billion in equity and $13 billion in debt. Analysts have estimated that Twitter’s interest burden would increase to around $850 million annually from $51 million in 2021, which is more than half of the company’s adjusted annual earnings of $1.4 billion in 2021. They also have estimated that the new debt would increase leverage to nearly nine times its annual adjusted earnings, up from the current 3.5 times.
Since some of Twitter's planned buyout debt is floating rate, Twitter could end up paying even more in annual interest costs as the Federal Reserve has raised rates this year and is expected to do so again in November.
The deal may also test investment banks like Morgan Stanley, Barclays PLC and Bank of America Corp. that signed commitment letters to fund the company’s buyout debt earlier in the year when interest rates were lower.
Musk to Close Deal On Original Terms
Every Website Should Be Owned By Its Worst User
Musk Hiding Something?
I believe that last Tweet is spot on. There is something in the offer or subsequent documents that Musk does not want the SEC or someone else to see.
My guess is whatever it is, will come out anyway. Regardless, the word strange does not do justice to this clown show saga.
This post originated at MishTalk.Com
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