Elon Musk told banks that agreed to help fund his $44 billion acquisition of Twitter Inc. that he could crack down on pay for the social media company’s executives and board members in the goal of reducing costs, and would develop new ways to monetize tweets, three people familiar with the matter said according to Reuters.

Musk pitched his offer to lenders as he tried to secure debt for the buyout days after he submitted his offer to Twitter on April 14, the sources said. His submission of bank pledges on April 21 was key to getting Twitter’s board to accept his “best and last” offer.

Musk had to convince the banks that Twitter was producing enough cash to pay off the debt he was seeking. In the end, he landed $13 billion in Twitter-backed loans and a $12.5 billion margin loan tied to his Tesla Inc stock. He agreed to pay the rest of the consideration with his own money. .

Musk’s pitch to the banks was his vision rather than firm commitments, the sources said, and the exact cost-cutting he will pursue once he owns Twitter remains unclear. The plan he presented to the banks lacked details, the sources added.

Musk tweeted about eliminating salaries for administrators from Twitter’s board, which he said could result in cost savings of around $3 million. Twitter’s stock-based compensation for the 12 months ending Dec. 31, 2021 was $630 million, a 33% increase from 2020, according to company filings.

In his speech to the banks, Musk also pointed to Twitter’s gross margin, which is well below that of peers such as Meta Platforms Inc’s Facebook and Pinterest, arguing that this leaves plenty of room to run the business in a way more profitable.

The sources requested anonymity as the matter is confidential. A representative for Musk declined to comment.

Bloomberg News reported earlier Thursday that Musk specifically mentioned the job cuts as part of his speech to the banks.

One of the sources said Musk would not make a decision on the job cuts until he takes ownership of the company later this year.

He made the acquisition without access to confidential information about the company’s financial performance and workforce.

Musk told the banks he also plans to develop features to boost business revenue, including new ways to make money from tweets that contain important information or go viral, the sources said.

Ideas he mentioned include charging a fee when a third-party website wants to quote or embed a tweet from verified individuals or organizations.

In a tweet earlier this month, which he later deleted, Musk suggested a series of changes to the social media giant’s premium subscription service Twitter Blue, including cutting its price, banning advertising and offering dogecoin cryptocurrency payment option. Twitter’s premium blue service now costs $2.99 ​​per month.

In another tweet that he deleted, Musk said he wanted to reduce Twitter’s reliance on advertising for a large chunk of its revenue.

Musk, whose net worth is pegged by Forbes at $246 billion, has indicated that he will support banks in marketing syndicated debt to investors, and may then reveal more details about his plan. business for Twitter, the sources said.

Musk has also appointed a new chief executive for Twitter, one of the sources added, declining to reveal the identity of that person.

He told Twitter Chairman Bret Taylor earlier this month that he had no confidence in the management of the San Francisco-based company.

Parag Agrawal, who was named CEO of Twitter in November, is expected to remain in the role until the company’s sale to Musk is finalized.

Too risky for some banks

Musk has been inundated with offers from potential partners to join him in the Twitter deal, and he will decide in the coming weeks whether to team up with someone, one of the sources said.

Musk is unlikely to partner with a private equity firm given that the deal is not structured like a traditional leveraged buyout, the source added.

Musk revealed this week that he sold $8.5 billion worth of Tesla stock, a move likely to fund his Twitter deal.

Tesla’s chief executive also told banks he would seek moderation policies on the social media platform that are as free as possible within the legal limits of each jurisdiction Twitter operates, the sources said, a position which he repeated publicly.

The $13 billion Twitter loan is equivalent to seven times Twitter’s projected 2022 earnings before interest, taxes, depreciation and amortization. It was too risky for some banks that decided to participate only in margin lending, the sources said.

Another reason some banks pulled out was because they feared Musk’s unpredictability could lead to an exodus of talent from Twitter, hurting its business, the sources said.

A Twitter spokesperson did not respond to a request for comment.

—Reuters