Banks that loaned money to Musk for Twitter takeover still holding the bag: Report

The banks that helped Elon Musk buy Twitter in 2022 are still stuck with the $13 billion debt, and it’s hurting their bottom lines.

According to a Wall Street Journal report, banks like Morgan Stanley and Bank of America that loaned Mr. Musk the money to take Twitter public in October 2022 have been unable to offload the debt without suffering massive losses. The loans are now stuck, or hung, on the bank’s balance sheets and have only worsened after Mr. Musk started calling the platform X in 2023. 

Typically, banks try to offload massive loans quickly after a takeover to earn money on fees. However, Twitter’s valuation quickly tanked after Mr. Musk’s $44 billion acquisition finished, and the company’s poor performance under the billionaire has made the loans even harder to shake.

According to the report, the loans have been hung longer than any similar deal since the 2008 financial crisis. The massive debt has led to compensation cuts for banking executives and tanked bank profits.

The report notes that some banks agreed to restructure the debt, letting X repay some of its outstanding debt for a lower interest rate. But X didn’t follow through.

The report comes as X continues to struggle financially. Since Mr. Musk took over, the social media platform has lost nearly three-quarters of its value, dropping from $44 billion to $12.5 billion. His X posts such as endorsing Donald Trump for president have turned off some advertisers but energized thousands of conservatives.

According to the report, the banks still see Mr. Musk’s other companies, SpaceX and Tesla specifically, as lucrative businesses that they want to work with.