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HindustanTimes Wed,27 Aug 2014

Facebook secures $6.5 bn revolving credit from JPMorgan

PTI  New Delhi, August 18, 2013
First Published: 12:22 IST(18/8/2013) | Last Updated: 12:25 IST(18/8/2013)

Social networking giant Facebook has tied up with JPMorgan Chase Bank for a revolving credit facility worth up to $6.5 billion, which will be utilised towards capital expenditure and general corporate purposes.

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In a revolving credit facility, the bank guarantees an amount that can be lend to consumer or corporates. The borrower is required to pay a commitment fee besides incurring some other expenses related to the facility.

"On August 15, 2013, Facebook entered into a five-year senior unsecured revolving credit facility with JPMorgan Chase Bank as Administrative Agent and the lenders party thereto.

"The 2013 revolving credit facility replaces the company's existing credit facilities and allows the company to borrow up to $6.5 billion to fund working capital and general corporate purposes," Facebook said in a filing to the US Securities and Exchange Commission (SEC).

Last month, the world's biggest online social network had posted net income of $333 million in April-June quarter on back of rising mobile advertising revenue. Its advertising revenues grew 61% to $1.6 billion and revenues from mobile ads accounted for 41% of the total revenues.

Facebook's business prospects are looking bullish, with rising number of users helped by emerging markets including India and increasing mobile advertising revenues.

Besides, buoyed by surging user base in emerging markets of India and Brazil, its monthly active users (MAUs) rose by 21% to 1.15 billion as of June 30, 2013.

Under the newly signed credit facility, interest will be payable on the borrowed amounts set at the London Interbank Offered Rate (LIBOR) plus 1%, Facebook said.

"Any amounts outstanding under this facility will be due on August 15, 2018. No amounts have been drawn under this facility as of the date hereof," the filing added.

With the fresh Revolving Credit Facility, Facebook has terminated its existing undrawn $5 billion revolving credit facility with JPMorgan Chase Bank.

"In addition, the company terminated its existing $1.5 billion term loan facility with JPMorgan Chase Bank ... under which it had $1.5 billion principal amount outstanding," it added.

Pursuant to the terms of the amended and restated term loan, the company had the option to repay this facility at any time prior to the maturity date without penalty, and the company repaid the principal and discharged itself of all other obligations in connection with the termination of this facility.

The California-based firm will make capital investments worth $1.6 billion this year of which it invested $595 million in first half of 2013 on setting up data centres and storage infrastructure, among others.


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