Elon Musk totally screwed his bankers who foolishly funded his Twitter LBO. Big mistake. I show how Banks can take over control from Elon, Twitter goes into recovery, & banks begin to recoup losses.
Question: If we make the not unreasonable assumption that the Twitter LBO debt is worthless, is there any incentive for the banks to recognize this now rather than kicking the can down the road? I guess (?) the banks don't act until the interest payments dry up. Banks being banks, I imagine the Twitter paper is recognized on the books at full value despite it being deeply impaired.
The difference, as I note in my report, is that Twitter still has value as a going concern—without Elon Musk. This, and the goal of escaping a toxic multiyear legal contract with Elon Musk, is strong incentive for the banks to pounce the second Twitter defaults on its debt. Bankrupticy is Twitter's best hope. Equity has long been totally wiped out, and that's Elon control. The banks hold ALL the debt and therefore Elon can't buy it to retain ownership in the restructuring.
Once the banks take over, Twitter can be slowly resuscitated under proper management. Banks can buy time for this to happen by accepting equity in the surviving venture.
The alternative is that Elon continues to support a perpetually failing Twitter. He somehow comes up with $1.3-1.5 interest annual interest every year and then repay ~$15 billion when the debt matures. I don't see that happening and the banks absolutely will not help him.
LOL that is certainly true! But I don't expect the banks to be rational. That ship has sailed. My solution is ALL about greed and the clash of Titans. This they know.
Question: If we make the not unreasonable assumption that the Twitter LBO debt is worthless, is there any incentive for the banks to recognize this now rather than kicking the can down the road? I guess (?) the banks don't act until the interest payments dry up. Banks being banks, I imagine the Twitter paper is recognized on the books at full value despite it being deeply impaired.
The difference, as I note in my report, is that Twitter still has value as a going concern—without Elon Musk. This, and the goal of escaping a toxic multiyear legal contract with Elon Musk, is strong incentive for the banks to pounce the second Twitter defaults on its debt. Bankrupticy is Twitter's best hope. Equity has long been totally wiped out, and that's Elon control. The banks hold ALL the debt and therefore Elon can't buy it to retain ownership in the restructuring.
Once the banks take over, Twitter can be slowly resuscitated under proper management. Banks can buy time for this to happen by accepting equity in the surviving venture.
The alternative is that Elon continues to support a perpetually failing Twitter. He somehow comes up with $1.3-1.5 interest annual interest every year and then repay ~$15 billion when the debt matures. I don't see that happening and the banks absolutely will not help him.
Although 'Rational Thought' and 'Morgan Stanley' are not necessarily consanguineous terms.
LOL that is certainly true! But I don't expect the banks to be rational. That ship has sailed. My solution is ALL about greed and the clash of Titans. This they know.