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Comment by nailer | Hacker News Reader

Elon losing money buying Twitter does not mean Twitter itself is losing more money.

Actually it does: he financed it like a PE looter, adding the debt to the target company. That gave Twitter an automatic $1-1.5 billion annual setback compared to where they had been.

https://www.bloomberg.com/opinion/articles/2022-04-21/elon-g...

The creditors must enjoy Elon talking about bankruptcy already. Maybe he thought he could stop the bleeding by firing everyone. But with advertisers out and revenue gone, he's set for an ugly legal battle in a few quarters. This has to be the most perilous business deal in the history of business and deals.

Yeah, I was expecting him to make a few cuts and focus on subscriptions or other revenue sources but I guess the losses he was looking at spurred a swing for the fences. I feel bad for anyone at Twitter who’s along for the ride.

The H1-B workers clinging on for dear life?

Yeah, that’s most of who I was thinking about along with anyone whose skills aren’t software developer-level portable. This kind of thing can be really disruptive to families if it forces a move.

It literally is. That's how every debt-financed corporate acquisition works. Twitter is paying this debt, not Elon from his pocket.

https://www.wsj.com/articles/elon-musks-buyout-will-load-twi...

So if it goes bankrupt what happens ? None of his assets aside Twitter gets seized ?

If Twitter fails to make payments on its debt then Morgan Stanley will become the proud new owner of Twitter. It is similar in structure to a mortgage on a house.

That seems like a really stupid loan to make then. If Twitter fails, it becomes mostly worthless, much like MySpace today. Why would a bank make such a loan? (It does seem like bankers are pretty stupid these days though, or just don't care because it's not their money.)

They set an interest rate in line with the risk that they are taking on. It seems like a pretty unlikely scenario where Twitter is worth nothing, if it goes bankrupt there can probably be a fairly sizable sale to recoup some value.

Allowing so long for the deal to close may have been a mistake due to what happened in the market between when they agreed to terms and when the deal closed.

He already paid 20B+ of his own money. Debt is only part of financing, AFAIK ~13B.

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