Musk-Trump Bromance Turns X Debt From Burden to Asset for Morgan Stanley

By Investor Empires On Jan 31, 2025

(Bloomberg)-Just a few months before, Morgan Stanley was stuck in billions of dollars in unpleasant debts associated with Eileon Musk’s controversial evening 2022 for the social media platform on Twitter.

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With the help of MUSK individual relationship with President Donald Trump and its new proximity to the White House, Morgan Stanley discovers that investors are attracted to the debts of the company that is now called X as banks lead to marketing a $ 3 billion offer. Possible buyers who have already got a peek on X’s Unanciesals see signs of recovery. As an additional reward, investors will get the company’s share in the Musk AI project, Xai.

The Morgan Stanley Stadium includes results showing a modified version of X 2024 profits, pre -interest profits, taxes, consumption and extinguishing, about $ 1.2 billion, according to people who have knowledge of the issue. The financial statements also reflect a stumbling block from an uproar related to the elections, as it has published about $ 400 million in Ebitda on $ 710 million of revenues in the past three months of the year-both of which are higher than the previous two quarters.

This paves the way for the bank and other lenders to start emptying what was a scourge on their public budgets for a better part of three years. The acquisition loans that were receiving offers of about 60 cents are now shopping at or more than 95 cents, according to persons familiar with the sales led by Morgan Stanley.

Morgan Stanley’s representative refused to comment.

Numbers analysis

X figures indicate that the revenues decreased by nearly half of the acquisition of the acquisition three years ago, but it also indicates that Musk’s severe costs helped in the business chart. For profits, the embitda is almost flat since that time before Musk jumps, but it contains a variety of adjustments that help enhance numbers, people say. Although this may not deserve to slap the $ 44 billion musk for work, it is sufficient to attract the interest of guaranteed creditors.

“The assets of value,” said Espen Robak, head and founder of Pluris Valulation Adviss, who specializes in non-liquid and difficulty.

Some people said that one note of the caution that investors in the financial statements in X relate to their revenues and profits from the “relevant parties” outside the basic social media platform of X. and restructuring the expenses from the Musk decision to get rid of a large part of X employees, in addition to investments , You will again add to the results. Investors will also witness that X is worth $ 400 million of money in its public budget – a sharp decrease of $ 1.4 billion in 2022, as people said.

Ultimately, even if X basic characters draw a mixed image, buyers may not care about abundance about musk.

The deal follows the sale of $ 1 billion to the debts that the banks recently completed between 90 to 95 cents in dollars as a market appetite test. It is a welcome turning point in the Morgan Stanley’s wealth, who advised MUSK to buy Twitter for 2022 and led seven banks arranged 13 billion dollars of debt financing for the deal.

The subscription group planned to resell debt to investors, who will face the associated risks. Instead, the banks were met with a strike for buyers, and they were forced to reduce the value of their property with the deterioration of X business, due to a series of business decisions by Musk. High interest rates by the Federal Reserve made things worse.

Certainly, banks that include the acquisition of benefit from them have received about $ 3 billion in debt x interest since 2022, according to Bloomberg accounts, far exceeded any paper losses. But the situation was not perfect. Banks usually try to market the companies ’loans they have made to investors as soon as possible to liberalize their public budgets. The so -called black eye suspended debt.

Now, although the events glow to make the X debts more attractive to investors. Musk, a TRMP enthusiastic supporter, has become a consultant for the new administration and investors expect to enhance the relationship with the president.

Morgan Stanley has photographed a $ 6 billion in XAi in XAI as a feature for Debtholders. The idea is not only that the work can flourish, and thus help X, but they can have a demand for Xai’s share if things have passed.

Despite some anomalous maneuvers, it seems that there is no shortage of investors who want an opportunity to possess a piece of X, and thus the Musk Empire. After the news broke out last week about the sale of a billion dollars of a loan, Morgan Stanley got swelling of inquiries, as some people said.

The noble return

It will now pay $ 3 billion of debts offered for sale in 2029 interest by 6.5 percent higher than the guaranteed financing rate. This reaches the noble return about 12 %. The price reflects the risk of buying a company debt that is currently not currently evaluated by credit rating agencies, which is about 10 times the leverage.

Perhaps the latest marketing efforts will not be the last as banks seek to cancel X. The current offer is safer than other unprecedented parts that lenders also have their books. It is certain that they will sell more dangerous pieces anywhere near the nominal value, if it can be done at all.

Dates are unusual in itself, but ascending and landing in the Twitter-TWTER-X deal was almost not facilitated-including what may become a profitable solution for Wall Street bankers who had been staring at a few months ago with a lot of different result.

Robert Wellens, a tax and accounting expert, said the banks are in view of the full image of their fees and the proposed interest revenues and assessments of loan sales, you will get a profit on the X.

“They definitely recovered more than 100 cents on the dollar,” he said.

-With the help of Jeannine Amodeo, Aaron Weinman, Gillian Tan and Paula Seligson.

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