Mon 11/14/2022 12:30 PM
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The $6.5 billion Twitter term loan partially backing Elon Musk’s $44 billion buyout of the social media platform is being informally marketed to a select group of investors at an OID of 60 as the underwriting banks seek to reduce their exposure to the company, according to sources.

Underwriters Morgan Stanley, Bank of America, Barclays, MUFG, BNP Paribas, Mizuho and Société Générale are offering portions of the $6.5 billion loan that carries a margin of S+475 bps and a 0.5% floor, the sources said. Hedge funds would be likely buyers of any pieces of the loan, given that most CLOs are unlikely buyers of loans priced at below 80, according to sources. The financing package totaling $13 billion is expected to be complemented by high-yield bonds, they added.

Musk’s $44 billion acquisition of Twitter closed on Oct. 27. CEO Parag Agrawal and CFO Ned Segal were immediately fired, according to news reports; Musk has since fired about half of the company’s 7,500-string workforce. According to news reports, Musk said in an email to Twitter employees last week that the company could face bankruptcy and warned of “difficult times ahead.”

Moody’s lowered the company’s CFR to B1 on Oct. 31, while S&P took the company to B- on Nov. 1. Both agencies cited the substantial increase in debt that came with the acquisition.

Musk said on Tesla’s Oct. 19 earnings call that he thought he and his investor consortium were “overpaying” for Twitter “right now” but that the long-term potential for Twitter is “an order of magnitude” greater than its current value. Musk added that he was “excited about the Twitter situation” and saw “incredible potential” in owning the company.

Official syndication of the loan or bonds is unlikely to take place in the near term amid market turbulence from the Federal Reserve’s rate tightening and macro issues including the Russia-Ukraine conflict, inflation and supply-chain challenges.

Morgan Stanley, Bank of America, Barclays, MUFG, BNP Paribas, Mizuho and Société Générale did not immediately respond to requests for comment.

--James Holloway, Adelene Lee
 
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