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Twitter reportedly made another interest payment, only the second of an expectedly long schedule of debt repayments expected from the company.
Twitter Inc has made its second interest payment as part of the $12.5 billion debt CEO Elon Musk used to buy the social media giant in 2022. Twitter paid a group of seven banks, including Morgan Stanley.
According to calculations by Bloomberg and market players unconnected to the deal, Twitter’s payment should be about $300 million. Bloomberg notes that Morgan Stanley and the other banks initially tried to sell the debt to external investors. Citing people familiar with the process, the report says that the group got stuck with the debt after their attempts failed.
Twitter made its first interest payment back in January. The same calculations suggest that it was also about $300 million. According to a report last year, Twitter might need to dedicate nearly $1 billion each to service the debt. This figure is considered a bit worrisome because, at the time, the estimated earnings before interest, taxes, depreciation and amortization (EBITDA) was $1.43 billion. EBITDA for 2023 was set at $1.85 billion.
Twitter Cut Costs to Stay Afloat and Make Interest Payments
To save money, Musk has initiated a lot of restructuring. Since taking over affairs at the microblogging giant, Musk has heavily cut down on staff count. In a BBC interview last month, the CEO confirmed that he crashed the count to about 1,500. This is a reduction of over 80% from the nearly 8,000 staffers he met when he took over. According to him:
“The company’s going to go bankrupt if we don’t cut costs immediately. This is not a caring-uncaring situation. It’s like if the whole ship sinks, then nobody’s got a job.”
Twitter also decided to open verification checkmarks to all interested users. It created a Twitter Blue subscription starting at $8 per month. Under the initial system, Twitter had about 400,000 verified users. Originally, Twitter reserved the marks as a sign of the user’s true identity, to protect others from interacting with parody accounts or imposters. However, Twitter eventually wound down the system, causing all verified users to lose their checkmarks.
Interestingly, Twitter later returned verification marks to many high-profile accounts. While the motivation or method is unclear, Musk initially said he is “paying for a few personally”. He however confirmed he is only doing them for actor William Shatner, NBA star LeBron James, and author Stephen King. A day earlier, King had explained that although Twitter restored his checkmark, he didn’t subscribe to Twitter Blue or provide a phone number.
Twitter API Access
In February, Twitter announced it would end its free API access. Following public backlash, Musk confirmed that there would be a free plan for the sake of “good content”. The company eventually announced the plans to renewed backlash.
The free plan only allows 1,500 post requests each month and Login access. A basic tier at $100 per month allows 50,000 post requests each month, along with 10,000 read requests. Other plans are considerably more expensive and range from $42,000 to $210,000.