X Corp Seeks to Restructure Acquisition Debt Through $3 Billion Private Financing Package

The refinancing effort, being coordinated by investment bank Morgan Stanley, represents a significant financial maneuver for the platform as it continues to navigate challenging business conditions and works to stabilize its finances nearly 18 months after Musk’s controversial takeover.

Strategic Refinancing Amid Ongoing Revenue Challenges

According to financial sources with direct knowledge of the negotiations, X Corp is specifically targeting the replacement of approximately $3 billion in high-interest debt currently held primarily by a consortium of seven banks, including Morgan Stanley, Bank of America, and Barclays, which provided crucial financing for Musk’s acquisition.

The proposed refinancing package would employ private credit — a burgeoning sector of the financial markets where investment firms directly provide loans to companies, often with more flexible terms than traditional bank financing or public bond markets. This approach has gained popularity among companies facing complex financial situations or transitional business models.

The current debt structure has placed significant financial pressure on X Corp, with interest expenses estimated at approximately $1.5 billion annually — a substantial burden for a company that continues to face advertiser hesitancy and revenue challenges following its acquisition and subsequent rebranding.

“This refinancing represents a pragmatic approach to managing the company’s capital structure during an ongoing business transformation,” noted a financial analyst who specializes in media company valuations. “Moving portions of the debt to private credit markets potentially provides greater flexibility as the company continues implementing its strategic vision.”

Complex Financial Backdrop Following Acquisition

The refinancing efforts come against the complex financial backdrop created by Musk’s unprecedented acquisition. The $44 billion purchase price, widely considered significantly above the platform’s fundamental valuation by most financial analysts, was financed through a combination of Musk’s personal equity commitment, investments from various financial partners, and approximately $13 billion in debt financing.

That debt burden has remained a significant financial challenge for the company, particularly as advertisers scaled back spending following Musk’s acquisition and subsequent content moderation policy changes. By some estimates, advertising revenue — which historically provided approximately 90% of the platform’s income — declined by as much as 50% following the ownership transition.

Musk has acknowledged these financial pressures on multiple occasions, noting last year that the company faced “negative cash flow” of approximately $3 billion annually and describing the platform as “still in the fast lane to bankruptcy” in a post published on the site itself.

However, more recent developments have shown some signs of financial stabilization. In a March interview, Musk claimed the company was “roughly breaking even” after extensive cost-cutting measures that included reducing the workforce from approximately 7,500 employees to fewer than 1,500.

Private Credit Markets Provide Alternative Financing Route

The company’s approach to private credit markets reflects broader trends in corporate financing, particularly for companies undergoing significant transitions or facing complex market conditions. Private credit providers typically offer greater flexibility in loan terms, though often at higher interest rates than traditional banking or public markets.

Financial sources involved in the negotiations indicated that several major asset managers and private credit providers have expressed preliminary interest in participating in the refinancing package, though no final agreements have been reached and terms remain under active negotiation.

“Private credit has emerged as an important financing alternative for companies in transitional situations,” explained a capital markets specialist at a major financial institution not directly involved in the transaction. “These lenders can customize terms to fit specific business situations and typically have longer investment horizons than traditional banks.”

The structure of the proposed refinancing would likely involve securing the new debt against specific assets of the company, potentially including its data centers, intellectual property, or other valuable components of its business infrastructure.

Broader Strategic Implications for Platform’s Future

Beyond addressing immediate financial pressures, the refinancing effort carries broader strategic implications for X Corp’s future. Successfully restructuring a portion of its debt would provide the company with greater financial flexibility as it continues implementing Musk’s vision of transforming the platform into what he has described as an “everything app” with expanded functionality beyond its traditional social media roots.

The company has launched several initiatives aimed at diversifying its revenue streams, including a subscription service that offers enhanced features for paying users. However, these efforts have not yet generated sufficient income to fully offset declines in traditional advertising revenue.

Industry analysts note that stabilizing the company’s financial structure represents an important step in its broader transformation strategy, potentially enabling more sustained investment in product development and business expansion initiatives.

“Addressing the debt burden is critical to creating sustainable financial footing for X’s longer-term ambitions,” noted a technology industry analyst who follows the company closely. “Without resolving these immediate financial pressures, implementing the broader strategic vision becomes significantly more challenging.”

Market Reaction and Future Outlook

While X Corp remains a private company following its acquisition, financial markets will likely view the refinancing effort as an important indicator of both investor confidence in the platform’s future and Musk’s commitment to stabilizing its financial foundation.

Representatives for X Corp and Morgan Stanley declined to comment on the ongoing refinancing discussions when contacted. However, sources familiar with the matter emphasized that negotiations remain active and that the company hopes to finalize arrangements in the coming weeks, subject to market conditions and successful completion of investor due diligence processes.

The outcome of these refinancing efforts will likely influence perceptions of Musk’s broader acquisition strategy and management approach as he continues navigating the complex transformation of one of the world’s most influential social media platforms amid persistent financial and operational challenges.