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There is not much difference. This is just one way to structure that. Basically, this is like a mortgage, where if Twitter goes bust, the bank takes a loss. But
by trashtester 4y ago
There is not much difference. This is just one way to structure that. Basically, this is like a mortgage, where if Twitter goes bust, the bank takes a loss. But if Twitter just falls in value compared to the purchase price, the bank gets their money back. For Musk (and potential other owners), this means he doesn't have to offer any other collateral than Twitter for that loan.
- paganel 4y agoI was mostly thinking on the recurring price of paying that debt, which, if I’m not mistaken, in cases like this one falls entirely on the acquired company (Twitter, in this case). This is irrespective of Twitter’s financial status, that money has to be paid on a recurrent manner. That’s an extra cost on future Twitter of which I was not aware of, a cost entirely brought by this acquisition.