Social network Facebook has secured a whopping credit line of $8 billion, as well as announcing an end to the Barclays Capital facility it had of 'just' 2.5 billion.
This move by the firm is to make for a smoother transaction when it becomes a publicly traded company, though the intricacies of this level of finance are a bit of a mouthful. The new limit has been reached with a consortium of banks that includes: Citigroup Global Markets, Credit Suisse Securities, Deutsche Bank Securities, RBC capital market and others. Together they have allowed Facebook a revolving credit facility over an unsecured five year period, for five billion dollars.
The other three billion comes from a bridge loan - which according to Wikipedia, is usually a temporary solution before agreeing on further long term funding.
"This bridge credit facility allows us to borrow up to USD 3,000 million to fund tax withholding and remittance obligations related to the settlement of RSUs (Restricted Stock Units) in connection with our initial public offering," said a Facebook statement.
Facebook has grown rapidly in recent years and its member count has already breached 840 million, with many expecting rapid growth in countries such as India and Brazil to help it reach the one billion threshold.
Source: The Economic Times