SAN FRANCISCO (Reuters) - Facebook Inc. plans to increase its line of $ 2.5 billion credit to help cover a major blow tax when employee ownership is acquired shortly after it goes public, according to two Sources familiar with the plans of the company.
The largest global network of social media, which increased its borrowing capacity by two-thirds six months ago, benefits from its strong position to get more funding for its phenomenal growth, the sources said.
The sources, speaking on condition of anonymity because they are not authorized to speak publicly on these plans.
A Facebook spokesman declined to comment.
"All these tax obligations are being created and you need cash to take care of it. You see all the time but in this case, it will be important," said Michael Moe GSV Capital, which owns shares in Facebook . "Having the money to be able to take care of this makes much sense. This is the motivation of a larger credit facility."
Facebook has said he plans to pay taxes on the units of its employees restricted stock or RSUs, once acquired the first six months after the company offered to the public. The exact amount is likely to run into billions of dollars, based on the share price of Facebook at the time.
Assist employees to cover taxes on PSUs is relatively unusual and lets the employer a "duty costly" that could increase if Facebook share rise, said Bart Greenberg, a partner at law firm Haynes and Boone LLP which advises companies to start-up high technology.
"It could create such a large cash bond he eats most of the credit facility," Greenberg added. "This facility may have been originally intended for acquisition opportunities or working capital."
Facebook said it can not sell equity securities, press its credit facility, using money or a combination of these options to meet its tax liability, according to its IPO.
In February 2011, Facebook introduced a deal of $ 1.5 billion credit facility with affiliates of Morgan Stanley, JP Morgan, Goldman Sachs, Bank of America Merrill Lynch and Barclays Capital, the leading underwriters of the opening of the capital. In September 2011, the borrowing capacity was increased by $ 2.5 billion.
"The golden rule of finance is that you get money when you can, not when you need it," said Moe, who co-founded investment bank ThinkEquity. "Creating a maximum flexibility will allow you to be efficient with your use of capital, but also opportunistic, if any. "
Other high-tech companies that went public recently have also organized similar credit facilities. Zynga, the giant social games, set up a plant for $ 1 billion with several underwriters of its IPO, which happened last year.
Facebook and Zynga generate substantial profits, but companies have large credit facilities because it is a good strategy for financing firms to align back-up cash from a position of strength, and Moe others said.
The months leading up to an IPO is a good time for companies to arrange credit facilities because they have power over the negotiations with banks vying for lucrative roles in equity issuance, according to the CFO of a major private technology firm who asked not to be identified.
(Compared Alistair Barr, edited by Richard Chang)
The largest global network of social media, which increased its borrowing capacity by two-thirds six months ago, benefits from its strong position to get more funding for its phenomenal growth, the sources said.
The sources, speaking on condition of anonymity because they are not authorized to speak publicly on these plans.
A Facebook spokesman declined to comment.
"All these tax obligations are being created and you need cash to take care of it. You see all the time but in this case, it will be important," said Michael Moe GSV Capital, which owns shares in Facebook . "Having the money to be able to take care of this makes much sense. This is the motivation of a larger credit facility."
Facebook has said he plans to pay taxes on the units of its employees restricted stock or RSUs, once acquired the first six months after the company offered to the public. The exact amount is likely to run into billions of dollars, based on the share price of Facebook at the time.
Assist employees to cover taxes on PSUs is relatively unusual and lets the employer a "duty costly" that could increase if Facebook share rise, said Bart Greenberg, a partner at law firm Haynes and Boone LLP which advises companies to start-up high technology.
"It could create such a large cash bond he eats most of the credit facility," Greenberg added. "This facility may have been originally intended for acquisition opportunities or working capital."
Facebook said it can not sell equity securities, press its credit facility, using money or a combination of these options to meet its tax liability, according to its IPO.
In February 2011, Facebook introduced a deal of $ 1.5 billion credit facility with affiliates of Morgan Stanley, JP Morgan, Goldman Sachs, Bank of America Merrill Lynch and Barclays Capital, the leading underwriters of the opening of the capital. In September 2011, the borrowing capacity was increased by $ 2.5 billion.
"The golden rule of finance is that you get money when you can, not when you need it," said Moe, who co-founded investment bank ThinkEquity. "Creating a maximum flexibility will allow you to be efficient with your use of capital, but also opportunistic, if any. "
Other high-tech companies that went public recently have also organized similar credit facilities. Zynga, the giant social games, set up a plant for $ 1 billion with several underwriters of its IPO, which happened last year.
Facebook and Zynga generate substantial profits, but companies have large credit facilities because it is a good strategy for financing firms to align back-up cash from a position of strength, and Moe others said.
The months leading up to an IPO is a good time for companies to arrange credit facilities because they have power over the negotiations with banks vying for lucrative roles in equity issuance, according to the CFO of a major private technology firm who asked not to be identified.
(Compared Alistair Barr, edited by Richard Chang)
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