Tatiana Bautzer and Saeed Azhar
New York (Reuters) – Street Bank is preparing to sell up to $3 billion in debt to X, the social media platform controlled by Elon Musk, two people with knowledge of the matter said on Friday.
Morgan Stanley Bankers has contacted investors ahead of a planned sale next week, the sources said.
Banks expect to get 90 to 95 cents on the dollar, according to the Wall Street Journal, which first reported preparations for the sale.
Musk denied the magazine’s report as “false,” posting on X that the paper “lied.”
The magazine cited a January email to X staff in which Musk said finances remained problematic but indicated the growing power and influence the company wielded.
Musk said in his X post that he “did not send such an email.”
Morgan Stanley and others such as Bank of America and Barclays lent Musk money to complete its $44 billion buyout of X, then known as Twitter, in 2022.
Morgan Stanley, Bank of America and Barclays did not immediately respond to requests for comment.
Banks usually sell such loans to investors soon after they are agreed, but lenders face difficulties in ceding the debt in X’s case.
Musk’s sweeping changes to the platform, including firing many people who worked on moderated content, and one of his posts on X, scared off advertisers and hit revenue. This reduced the value of the debt, as the risk of default increased.
Reuters reported in November that Musk’s political rise and proximity to President Donald Trump had banks thinking about the social media platform’s improved prospects, helping them sell debt without having to take a huge loss on the deal.
Attempts to sell the debt in late 2022 attracted bids that would see banks take as much as a 20% loss on the face value of the debt, sources said at the time.
Other banks in the consortium that helped finance the deal include Mitsubishi UFJ BNP Paribas, Mizuho and Societe Generale.
(Reporting by Tatiana Bautzer and Saeed Azhar in New York and Pritam Biswas and Chandni Shah in Bengaluru; Editing by Shailesh Kuber, Sriraj Kalluvila and William Mallard)
