NEW YORK, Jan 24 (Reuters) - Wall Street banks are preparing to sell around $3 billion of debt holdings in X, the social media platform controlled by Elon Musk, as informed by two individuals familiar with the situation on Friday.
According to the sources, Morgan Stanley bankers have reached out to investors in anticipation of a planned sale next week.
Reports from the Wall Street Journal indicate that the banks are anticipating a range of 90 to 95 cents on the dollar for the debt sale.
Musk refuted the Journal's article as "false," stating on X that the newspaper was "lying."
Referencing a January email sent to X staff, The Journal highlighted Musk's acknowledgment of ongoing financial challenges while emphasizing the company's increasing influence.
Musk countered in his X post asserting that he had "sent no such email."
Morgan Stanley, Bank of America, and Barclays were among the lenders who provided Musk with funding to acquire X, previously known as Twitter, in 2022.
When contacted for comment, Morgan Stanley, Bank of America, and Barclays did not immediately respond.
Typically, banks sell such loans to investors shortly after a deal concludes. However, in the case of X, lenders have encountered difficulties in offloading the debt.
Musk's significant alterations to the platform, including substantial lay-offs of content moderators and controversial posts on X, have deterred advertisers and subsequently impacted revenues. This, in turn, lowered the debt's value due to heightened default risks.
In November, Reuters reported that banks were reassessing the potential of the social media platform following its connections and Biden's presidency, which could aid in debt sales without incurring significant losses.
Debt sale attempts in late 2022 met bids suggesting banks might face up to a 20% loss on the debt's face value, as mentioned by sources at the time.
Additional banks involved in financing the deal include Mitsubishi UFJ, BNP Paribas, Mizuho, and Societe Generale.