The Twitter Deal's Big Debt Bill

If the acquisition goes through, the company will face mounting interest expenses as it tries to grow

- Paula Seligson

Elon Musk has been showing some buyer’s remorse over his deal to buy Twitter, complaining loudly about the number of fake users on the social media platform. He’s even tweeted that he won’t proceed unless Twitter proves bots make up fewer than 5% of its users, setting up a potential showdown with the company’s board, which says it plans to hold him to the merger agreement.

But to sober-minded credit analysts, there’s another reason to have second thoughts about such a costly acquisition: a $13 billion debt load that’s looking like it could be a bigger burden by the day for Twitter Inc.

The package drummed up in a rush and signed by banks before the end of the billionaire’s beloved April 20 weed holiday, would give the company an alarmingly small margin for error. Musk would fund his purchase with high-yield bonds and a loan from institutional investors. Research firm CreditSights estimates the new debt will dramatically increase Twitter’s annual interest expense to about $900 million; Bloomberg Intelligence’s estimate is $750 million to $1 billion. The company’s interest costs were only $53.5 million during the past 12 months.