As Elon Musk transforms Twitter, risk hits home for Japanese banks

TOKYO, Nov 09 (Nikkei) - As Elon Musk makes dramatic changes to Twitter following his $44 billion acquisition, Japanese banks that cofinanced the deal find themselves with little choice but to go along for the ride.

Seven banks backed the outspoken billionaire's leveraged buyout, which closed on Oct. 27, with $12.7 billion in lending. Morgan Stanley led the group at $3.4 billion, followed by Bank of America, Barclays and MUFG Bank -- Japan's top lender -- at $2.6 billion each. Smaller Japanese lender Mizuho Bank contributed $400 million.

At first the excitement was palpable, with one banker saying, "It's important to get involved in a deal that the whole world is watching."

But with the prospect of an exit unclear, fatigue appears to be setting in.

Under Musk, Twitter has fired thousands of employees -- by some reports half the workforce. Headwinds against the new management team have risen, with major advertisers pulling away from the social media platform over concerns about changes in content moderation.

"We are at the mercy of Musk's theatrics," the banker said. "We can't sell the debt in the current market conditions. All we can do is wait for Elon Musk to explain how he will turn things around in a way that investors will agree to."

The problem of assessing Musk's sometimes difficult relationship with compliance was discussed in April as Japanese banks pushed the lending proposal through internal decision-making processes at an unprecedented pace. At that time, there were some who argued they could be going even bigger, despite the risk. ...continue reading

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