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Elon Musk Twitter saga: Banks sweating; employees resigned

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Season one of the Elon Musk Twitter saga drew to a close yesterday when the billionaire announced that he would proceed with his promised purchase, and the company accepted.

But there’s much more to come, of course, even if there is no surprise twist. The latest fun begins with banks starting to sweat over the terms of their own involvement…

For anyone who didn’t watch the early episodes, Musk started quietly buying up Twitter shares, was offered and accepted a seat on the company’s board, changed his mind a day later, offered to buy the company, Twitter resisted, then accepted before Musk tried to back out, Twitter sued, and now it’s all going ahead again. I mean, the full story has more sketchy emojis, but that’s the gist.

Banks sweating

Bloomberg reports that the delay in the purchase has put Musk’s bankers in a tricky situation.

Elon Musk’s shock proposal to proceed with his acquisition of Twitter Inc. for the original offer price poses a headache at the worst possible time for Wall Street banks already struggling to offload billions of dollars in buyout debt they committed to in better times.

After months of legal drama in an attempt to back out of the deal, billionaire Musk is now willing to buy the social-media giant for $54.20 a share […] That means it’s now time for a group of Wall Street banks led by Morgan Stanley to step up. They committed debt financing for the deal back in April, with the intention to sell most of that to institutional investors.

If terms of the original $12.5 billion financing package remain the same, bankers may struggle to sell the risky Twitter buyout debt just as credit markets begin to crack. With yields at multiyear highs, they’re potentially on the hook for hundreds of millions of dollars of losses on the unsecured portion alone should they try to unload it to investors. That’s because they would almost certainly have to offer the debt at a steep discount.

If, on the other hand, banks attempt to renegotiate terms, that could delay the purchase, or even put its feasibility at risk. It’s not impossible that we’ll face the prospect of another lawsuit, this time between Musk and his bankers.

Twitter employees resigned/resigning

While there was much concern from employees at the time of the bid, most now appear resigned to it – or plan to resign. The Verge reports.

“I don’t understand why Elon would need to propose the deal again,” wrote one employee. “The original one still stands. Just write the check, bro.”

Another employee summarized the mood by saying that employees generally have a low opinion of Musk, and whatever is going to happen next they would rather he and Twitter get on with it already.

Another employee responded: “Learnt a lot, met some awesome folks, enjoyed the ride, now time to exit the theme park and let the new owner raze it to the ground and build what he wants (metaphorically).”

The New York Times said that the balance was very much on the “resigning” side of the equation.

Virtually every Twitter employee I’ve spoken to in the last six months has told me that he or she plans to leave if Mr. Musk takes over.

Agrawal will go, Trump will return

The NYT also predicts that CEO Parag Agrawal will be fired, and that former President Trump will be allowed to return.

From reading Mr. Musk’s texts, it’s clear he believes that Twitter’s leadership is weak and ineffective, and lacks the ability to carry out his vision for the company. If Mr. Agrawal doesn’t immediately resign once the deal is complete, I’d expect Mr. Musk to fire him on Day 1 and name himself or a close ally as a replacement […]

Mr. Musk, who has framed his bid for Twitter as an attempt to preserve free speech on the platform, has long said that, if successful, he would allow former President Donald J. Trump to reclaim his Twitter account, which was permanently suspended last year after the Jan. 6 insurrection at the Capitol.

That will happen almost immediately, I predict. (And, yes, Mr. Trump will come back to Twitter if he’s invited, no matter how much fun he’s having on Truth Social.)

Others who were barred for hate speech, harassment, or propagating fake news will also likely be allowed to return.

More Elon Musk Twitter concerns

There are concerns about the impact this will have on the integrity of both the upcoming midterms and the 2024 presidential elections.

Along with one-off reversals of high-profile bans, I’d also expect that Mr. Musk would tear up Twitter’s existing rules and rewrite new ones, and that he might dismantle Twitter’s content-policy and trust-and-safety teams, which are responsible for enforcing the platform’s rules as they currently exist. (That is, if those teams don’t quit en masse first.)

Season two of the saga looks set to be “interesting”…

Photo: Benjamin Ranger/Unsplash

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