Twitter has reached its goal of raising a $1 billion (£618.5 million) credit line ahead of its upcoming initial public offering (IPO). Estimates put Twitter's stock market worth at $15 billion.
The social network's stock market flotation is one of the most keenly-watch prospects since Facebook went public last year, but public enthusiasm has been low since Facebook's disappointing opening in May of last year.
Facebook's IPO was rocky for all parties involved. While the flotation raised almost $16 billion (£9.9 billion) in cash, the predicted rise in share prices failed to materialise, with stock ending the first day a paltry 0.6 per cent up.
At one point on the first day, bankers had to step in to prop up the company's slipping shares. Other technology companies took a hit to their prices, too, while the exchanges as a whole slumped on the disappointing opening.
Twitter's assured line of credit will ensure that the company will be able to borrow up to $1 billion to cover any unforeseen expenses that suddenly arise during the IPO. In other words, it's insurance money.
It's common for companies to seek such guaranteed credit as a backup against a bumpy IPO. Facebook secured an $8 billion credit line in March 2012 ahead of its flotation.
Twitter's credit line was arranged with the involvement of financial institutions as wide-ranging as Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America Merrill Lynch and Deutsche Bank, who are all underwriting the flotation.
Dan Veru, chief investment officer at the Fort Lee, NJ firm, hinted the Twitter might not do as well as Mark Zuckerberg's company.
"We had more individual clients asking about Facebook than we have asking about Twitter," he said. "Twitter is a little bit more nichey, whereas Facebook is a little more broad. Everybody is using Facebook."
Twitter has arranged to make its IPO on the New York Stock Exchange, rather than the Nasdaq, where Facebook was floated. It intends to list its shares under the symbol TWTR.
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