On January 4th, 2023 Term Sheet, a well-known financial newsletter by Fortune (typically regarding PE/VC) posted a series of predictions regarding the calendar year 2023.
One of these predictions was the following:
“Twitter struggles to make interest payments on their recently acquired debt of ~$14 billion and is forced to sell more equity to cover the cost. Elon makes a play to acquire that debt at the actual value of Twitter (estimated to be closer to $10Bn than $44Bn) and is able to recoup some of the premium he paid for Twitter via a quasi-reorganization. He converts that debt to equity, further increasing his exposure to the investment. He changes the revenue model to be a mix of blue check $8 subscription for premium content or some special form of access and begins to add direct communication features for users which starts to re-attract lost ad customers. He incorporates a payment system that does not require a bank account to transfer funds, only a Twitter handle and cell phone number. Twitter cracks the code on ‘banking the unbankable’ and returns to its previous glory.” —Matt Barbieri, partner, Wiss & Company
I will not attempt to initially define all resolution criteria in this market and will instead attempt to handle any nuances/complications/data feasibility as it arises. If by end of 2023 I think it is not possible to confidently resolve this market in the spirit in which it was intended, I reserve the right to resolve as "n/a".
Any clarifications to the resolution criteria will be listed below, along with the applicable date:
[TBU]
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This was last traded on half a year ago. I don't know enough about this stuff to trade though. Two recent articles from Fortune:
https://archive.ph/cRa6D
To fortify their position, Morgan Stanley, Barclays, and Bank of America, lenders that combined furnished almost 70% of the financing, have agreed to what’s known as a joint “sell-down letter” that expires on Jan. 15, the source told Fortune. Though all three banks declined to comment, and the exact details of the arrangement aren’t known, sell-down letters typically require that if one bank receives an offer for its loans, it can’t accept without giving the other members the right to the same deal on a pro rata basis.
Isn't this just anticompetitive?
That structure prevents the lenders from falling prey to a “divide and conquer” approach where shoppers set the banks against one another in an auction to the bottom.
this is price discovery in a market?
@jacksonpolack It hasn't traded because if it had we would know it's value on the books of the banks today.
@jacksonpolack the banks wouldn't have to pay for this debt in the form of publicly traded instruments.