A look at Elon Musk's options to meet his $13B debt obligations after the Twitter buyout; sources say the first interest installment could be due by January-end
Billionaire faces tough choices to meet financial obligations of takeover financed by $13bn debt
Financial Times
Context & Ripple Effects
When Elon Musk closed the Twitter buyout, US banks backing the deal chose to hold all $13B of acquisition debt on their own balance sheets rather than sell it into a difficult market — leaving them, not bond investors, exposed to the loan's performance. The cost side was known from the start: analysts pegged the deal at roughly $1B a year in interest expense, against $51M in 2021, on a business whose operations generated about $633M of cash flow.
This article lands at the moment that bill comes due: sources say the first interest installment could be owed by end of January, forcing Musk to choose among financing structures he had been evaluating since spring 2022, including preferred debt and a loan against his Tesla stake. Within days, his team was reportedly exploring selling up to $3B in new Twitter shares to repay part of the debt — an early signal of which option won.
First-order effects
Musk must fund the first interest installment by end of January out of a company generating far less cash than the ~$1B annual interest burden requires, pushing him toward new equity issuance or borrowing against his Tesla holdings.
Twitter's advertising base — $1.08B in Q2 2022 revenue alone — becomes the repayment engine, making every moderation and product decision immediately consequential to debt service.
Second-order effects
The seven banks warehousing the $13B cannot exit without absorbing losses; a year later they still held the debt and expected a 15%+ hit, roughly $2B, when selling — turning the deal into a test case for how much LBO risk lenders will retain.
Pressure to service the debt pushes Twitter toward aggressive monetization moves, including deprioritizing external links and reshaping the platform's ad ecosystem to protect revenue.
Third-order effects
If banks keep absorbing unsold mega-buyout debt rather than syndicating it, leveraged-acquisition underwriting shifts from a distributed market risk to concentrated balance-sheet risk, tightening terms for future founder-led takeovers.
Musk's structure — personal Tesla collateral plus platform cash flows pledged against a social network's turnaround — blurs the line between corporate and founder balance sheets, a template other billionaire-led acquisitions may follow.
The trend: Large leveraged buyouts are shifting from syndicated debt markets to bank-warehoused loans backed by founder collateral, with the lender's exit loss becoming the real price of the deal.
“The first instalment of interest payments related to $13bn of debt he used to fund the takeover could be due as soon as the end of January. That debt means the company must pay about $1.5bn in annual interest payments.” https://www.ft.com/...
It is more likely [Musk] would ask Twitter's creditors for a forbearance and try and work something out," said one restructuring banker $TSLA $TSLAQ https://twitter.com/...
“Bankers are in discussions with Musk to replace about $3bn of expensive unsecured debt that has an interest rate of 11.75 per cent, with margin loans, backed by Musk's stake in Tesla, according to two people close to the matter.” What. https://www.ft.com/...
Good read (though not for Musk or his bankers) Looming Twitter interest payment leaves Elon Musk with unpalatable options via @FT https://giftarticle.ft.com/...
“Technology equity analyst Dan Ives at Wedbush Securities said that Twitter was worth closer to $15bn today than the $44bn Musk paid for it.” https://twitter.com/...
“If Twitter did not make its first interest payment, it would join a small but notorious club of companies dubbed “NCAA” by debt traders — short for “no coupon at all” — that includes US car rental company Hertz and German payments group Wirecard.” https://twitter.com/...
Will Twitter join the NCAA (No Coupon At All) club at the end of the month? Fab piece by @Tabby_Kinder @RichardWaters and @EricGPlatt https://www.ft.com/... https://twitter.com/...
The institutional consensus is now that Twitter's worth much less than the $44B Elon paid for it thanks to his actions. The most likely business outcomes are that he sells it at a loss or the company files bankruptcy while the product continues to decay. https://www.ft.com/...
'Musk's personal equity investment in Twitter of about $26bn would be effectively wiped out in the event of a bankruptcy alongside other equity stakeholders such as Sequoia Capital, Oracle co-founder Larry Ellison and Saudi prince Alwaleed bin Talal... 1/3 https://www.ft.com/...
90 days inside Elon's chaotic Twitter takeover, by @ZoeSchiffer @alexeheath @CaseyNewton, published in partnership with our friends at @NYMag. Also, there is an Elon net-worth-o-meter lol https://www.theverge.com/...
“Today, Musk has become notorious for the speech he suppresses, rather than the speech he allows, from suspending journalists for tweeting links to his jet tracker to briefly restricting users from linking to their accounts on Instagram and Mastodon.” https://www.theverge.com/...
Imagine being “stoked” that Elon became your CEO, you email him and then fired. 🙃 https://www.theverge.com/... It's also nice to see I'm not the only one who does a goof with URLs sometimes “workplace-salute-emoji” 😂 Or is that URL intentional 🤔 https://twitter.com/...