The three banks Morgan Stanley, Barclays, and Bank of America may received a “sell-down letter”. Morgan Stanley, Barclays, and Bank of America have agreed to a joint “sell-down letter,”. This forbids any party of the agreement from selling off their X debt at a discount without alerting the other members. These banks backed Elon Musk’s $44 billion buyout of Twitter may have received a “sell-down letter” to discourage them from breaking ranks. Though all three banks declined to comment, and the specific details of the arrangement are unknown, sell-down letters. As if one bank receives an offer for its debts, it cannot accept without also accepting a pro rata share of the same transaction from the other institutions. This structure prevents lenders from falling to a “divide and conquer” tactic. Due to this customers pit banks against one another in a bottom-of-the-barrel auction.
Elon Musk currently has the upper hand when negotiating with banks due to X’s poor financial performance. The three of the seven lenders who backed Musk’s bid to buy Twitter may have formed a group to protect themselves from the chaos. This would accompany a fire sale. Due to the catastrophic deterioration in X’s finances the lenders have been unable to sell the debt to investors as intended. As Musk gained control in October of 2022.
The only way they’ll be able to pay off the loans is to accept substantial discounts from possible buyers. Morgan Stanley, Barclays, and Bank of America, which together contributed around 70% of the capital. They have agreed to a single “sell-down letter” that expires on January 15.
As the banks are pleased that new CEO Linda Yaccarino is looking for a CEO. The new CEO would, ideally, conduct a more comprehensive audit of the accounts. For the time being, a lack of data prevents lenders from delivering a comprehensive package to potential purchasers. As per Fortune, The banks are also upset with X’s insufficient supply of financial information.
Elon Musk himself is in a powerful position. He is to purchase a large portion of the debt pile that’s haunting X at a significant discount. Also to secure a solution in which the banks simply write off some of the loans. This may improving X’s standing and allowing them to safely syndicate the rest.
You may also read : FNB introduced a suite of structured investment solutions
[…] Three banks may received “sell-down letter” […]