Wall Street Banks to Offload $3 Billion in X Corp. Acquisition Loans

In a significant financial maneuver, leading Wall Street banks, including Morgan Stanley, Bank of America, and Barclays, are preparing to sell up to $3 billion in loans associated with Elon Musk's acquisition of X Corp., formerly known as Twitter. This sale is slated for next week, as reported by Reuters.

These financial institutions had initially extended substantial loans to Musk to facilitate his $44 billion purchase of the social media platform in 2022. However, following the acquisition, X Corp. underwent significant operational changes, including widespread layoffs and policy shifts, which adversely affected its revenue streams and heightened concerns regarding the company's debt repayment capabilities.

In light of these developments, the involved banks are aiming to sell the debt at approximately 90 to 95 cents on the dollar. This approach is notably more favorable than previous attempts in late 2022, where bids were lower, potentially resulting in losses of up to 20%.

The consortium of banks supporting this financial endeavor also comprises institutions such as Mitsubishi UFJ, BNP Paribas, Mizuho, and Societe Generale. Their collective strategy reflects a concerted effort to mitigate exposure to the volatile financial standing of X Corp.

This planned sale underscores the broader challenges and uncertainties inherent in high-profile leveraged acquisitions, especially when subsequent corporate restructuring impacts financial performance. The outcome of this debt sale will be closely monitored by industry analysts, as it may set a precedent for future transactions of a similar nature.

As the situation develops, stakeholders and market observers will be keen to assess the implications of this sale on both the involved financial institutions and X Corp.'s ongoing operations. The success of this transaction could influence strategies for managing leveraged buyouts and associated debt in the technology sector and beyond.