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Under new owner Elon Musk, Twitter Inc quit paying rent on its San Francisco headquarters in December, according to a lawsuit filed by the landlord.
The social media company failed to pay the US$3,36 million December rent for its offices at 1355 Market Street and the US$3,42 million for January rent, Sri Nine Market Square LLC, the owner of the building, said in a lawsuit filed on Monday in state court in California.
Since taking over Twitter, the billionaire has been slashing costs. He’s fired half the staff, held back rent on the company’s other offices around the world and refused to pay some outstanding bills, such as a jet charter. Those measures come as Musk is facing his first payment on the US$12,5 billion in debt he took on to acquire Twitter.
The suit also comes with Musk on the witness stand in a securities fraud trial in San Francisco where he is defending his tweet to take Tesla Inc. private. He was set to return Tuesday to finish his testimony.
Twitter rents more than 460 000 square feet of space on eight floors of the San Francisco building, according to the complaint. Sri Nine Market Square held a letter of credit for US$3,6 million as security, which Twitter was required to increase to US$10 million if there were a transfer in control, which occurred when Musk bought the company in October for US$44 billion.
Twitter argued it didn’t have to boost the line of credit, according to the complaint.
Sri Nine said it drew upon the existing line of credit to cover the December rent of US$3,36 million and a portion of the January rent, leaving the balance of the line of credit at US$1.
Sri Nine is seeking to recover the unpaid rent and a court declaration that Twitter is in breach of the lease for failing to increase the line of credit to $10 million. — Bloomberg.
Online Reporter