Facebook Gets $8 Billion Line of CreditBy: Chris Gabbard - March 9, 2012
As part of some strategic moves Facebook is making ahead of their IPO, the company has received financing to the tune of $8 billion.
The loans include a $5 billion revolving line of credit and a $3 billion 364-day bridge loan. This credit line will replace the companies current $2.5 billion revolving credit line used for general business purposes. The $3 billion bridge loan will be used to cover taxes for Facebook employees’ restricted stock units. Financiers include heavy hitters, JPMorgan Chase & Co., Morgan Stanley, Goldman Sachs Group Inc., Bank of America Corp. and Barclays PLC.
As part of the deal, Facebook added 25 new underwriters (bringing the total to 31) to its updated IPO filing, including Citigroup Global Markets Inc., RBC Capital Markets LLC and Wells Fargo Securities LLC. (Underwriters buy the IPO securities from the company and resell them to the public.)
According to the updated filing, the $5 billion line of credit will be used for working capital and general purposes. It may also help with potential litigation costs. So far Yahoo has asked Facebook to license technology they believe to be covered under their intelectual property, threatening suit if the matter is unresolved.
Yahoo may not be the only ones to have legal issues with Facebook. According to their SEC filing, “We presently are involved in a number of lawsuits, and as we face increasing competition and gain an increasingly high profile, including in connection with our initial public offering, we expect the number of patent and other intellectual property claims against us to grow.”
Facebook made about $3.71 Billion last year, mostly in advertising. The company is marketing to an estimated 845 million monthly active users.
Investors are still strong on Facebook, estimating the value at around $100 million. Facebook hopes to raise $5 Billion in sales of its IPO shares, potentially making this the largest internet IPO to date.