Elon Musk seeks to sell shares of Twitter in search of new funds

The chief of Elon Musk’s family office has contacted the investors who helped the billionaire buy Twitter for $44 billion in October to try to raise new cash as the social media company continues to bleed cash and faces large interest payments on its debt.

Jared Birchall, a former Morgan Stanley banker, contacted Twitter shareholders Thursday afternoon, according to two people familiar with the matter. He offered new stock in the company at $54.20 — the same price Musk paid to take the company private.

Its note to investors, first reported by Semaphore, said Twitter was “delighted to announce a share follow-up offer for common shares at the original price and terms,” ​​according to one of the people who received it.

The memo didn’t say how much Twitter expects to raise in its new fundraising efforts, but said it aims to close the fundraising operation by the end of the year.

“Everything was done haphazardly and roughly,” said investment advisor Ross Gerber, who invested in the Twitter deal in October and confirmed he received the latest offer. “They’re doing it because they’ve run out of money. I don’t think so.” [Musk] Expect such a significant drop in revenue.”

Another person whose company received the offer said Musk indicated the new capital would be used to fund an expansion of its business, including a “hiring spree” for programmers to build a “super app” that can process payments, among other services.

The person said Birchall and Musk planned to make a series of calls with Twitter investors who want to increase their stake in the company.

Musk bought Twitter after a dramatic six-month legal row, financing the acquisition with about $13 billion in debt and about $7 billion in outside capital.

But it has been racing to cut costs since then, including by laying off about half of Twitter’s staff, after advertisers fled the platform over concerns about its content moderation strategy, threatening its $5 billion a year in advertising business.

A number of high-profile investors have written large checks to help fund Musk’s purchase of Twitter for stock stakes, including Sequoia Capital, Andreessen Horowitz, Oracle co-founder Larry Ellison, and the Binance exchange.

Banks including Morgan Stanley, Bank of America and Barclays are facing significant losses in their financing package. Twitter, which posted a loss of about $221 million in 2021, must pay annual interest of about $1 billion on the loan.

Between Monday and Wednesday, Musk sold $3.6 billion in Tesla Inc., the electric car maker he founded and drives. It was his fourth sale of Tesla stock this year, bringing his total disposals to nearly $40 billion.

The sales came despite Musk saying there would be “no more TSLA sales” to support the Twitter deal in April.

On Tuesday, Musk tweeted: “At the risk of making a clear statement, beware of debt in turbulent macroeconomic conditions, especially when the Fed continues to raise interest rates.”

The banks that undertook the debt of the Twitter takeover are desperate to sell the subprime loans to credit investors and get them off their balance sheets. However, the deep cuts demanded by investors could lead to losses that could easily reach $1 billion, people familiar with the matter told the Financial Times.

Musk could not be reached for comment on Friday. Twitter did not respond to a request for comment.

Additional reporting by Hannah Murphy and Ortenka Aliaj