Twitter got a $1 billion credit line from some of the banks helping to underwrite its initial public offering, highlighting the sway the social media company has with Wall Street.
Twitter set up a revolving credit agreement with lenders this month. The line lets the company borrow as much as $1 billion in a deal that matures Oct 22, 2018, according to an updated IPO filing Tuesday.
Twitter will have to pay interest if it borrows from the facility, based on common market rates, plus a margin for the banks and related fees. Twitter said it had not borrowed anything from the credit line as of Tuesday.
Twitter is the latest high-profile technology company to borrow money from banks underwriting its IPO. Facebook did the same in 2012 and Zynga also arranged a credit line in 2011 when the social games company went public.
Banks are willing to extend this type of credit because it creates a relationship with companies that may lead to other more lucrative work. These credit lines are often seen as the price banks have to pay to win high-profile IPO mandates.
Source : USA Today
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