Airbnb to terminate US$1 billion credit facility after private equity deal: sources

Airbnb to terminate US$1 billion credit facility after private equity deal: sources

Airbnb Inc is planning to terminate a US$1 billion credit facility following an investment of the same amount it secured from private equity firms Silver Lake and Sixth Street Partners, people familiar with the matter said on Tuesday.

FILE PHOTO: Airbnb logo is seen on a little mini pyramid under the glass Pyramid of the Louvre muse
FILE PHOTO: The Airbnb logo is seen on a little mini pyramid under the glass Pyramid of the Louvre museum in Paris, France, March 12, 2019. .REUTERS/Charles Platiau/File Photo

REUTERS: Airbnb Inc is planning to terminate a US$1 billion credit facility following an investment of the same amount it secured from private equity firms Silver Lake and Sixth Street Partners, people familiar with the matter said on Tuesday.

The deal with Silver Lake and Sixth Street is comprised of US$1 billion in five-year debt yielding 11per cent to 12per cent and warrants that can convert into stock equating to a little over 1per cent of Airbnb's total equity, the sources said. They requested anonymity as the terms are confidential.

The deal raised Airbnb's cash reserves to around US$4 billion.

In March, Reuters reported the short-term home rental platform held a phone meeting with lenders to discuss extending an existing US$1 billion debt facility, which was led by Bank of America , amid a slowdown in demand due to the coronavirus pandemic.

Airbnb is now also in talks with banks about a new line of credit that could be worth as much as US$750 million or US$1 billion, one source said.

The price at which Silver Lake and Sixth Street can exercise its warrants values Airbnb at US$18 billion, below the US$26 billion Airbnb was most valued in early March in its internal valuation, another source said.

Airbnb was valued at US$31 billion in its most recent private fund-raising round.

Silver Lake is targeting a valuation for Airbnb of US$40 billion to US$50 billion to hit its return target, one of the sources said, declining to provide more details.

Airbnb declined to comment. Silver Lake Sixth Street and Bank of America did not immediately respond to requests for comment.

(Reporting by Joshua Franklin in New York; Editing by Tom Brown)

Source: Reuters

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