Twitter extended $1 billion credit line ahead of IPO

Twitter Inc had obtained a $1-billion credit line ahead of its initial public offering, the company disclosed yesterday in an amended investor prospectus.

Earlier this month Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America Merrill Lynch, and Deutsche Bank, who are underwriting Twitter's IPO, are reportedly involved in arranging the credit deal.

According to Twitter, no amounts had been drawn under the credit facility.

The micro-blogging company, the hottest social media IPO prospect after Facebook, which listed last year, is expected to start trading on the New York Stock Exchange by mid-November.

Twitter further disclosed that losses at MoPub Inc, a digital advertising exchange it acquired in September, amounted to $2.8 million in the first six months of the year on $6.5 million revenue.

For the company, its largest acquisition to date, Twitter paid $350 million in stock. The deal was expected to close in November, according the filing.

The banks underwriting Twitter Inc's upcoming initial public offering have officially agreed to lend it around $1 billion over the next five years, a new filing with regulators revealed.

The $1 billion revolving credit facility, completed this month would mature in October 2018, as detailed in an updated Securities and Exchange Commission filing late yesterday.

The Wall Street Journal reports that the San Francisco-based microblogging service would pay an interest rate on any money it borrowed ranging from 1 to 1.75 percentage points over the London interbank offered rate, or Libor, the rate at which banks lend to each other, according to the filing.

The rate would depend upon the amount Twitter had borrowed versus how much cash profits it generated.

According to the newspaper, it was unusual for young technology companies to be able to borrow such large sums, but Twitter - like other recent internet companies going public had been able to secure funds from banks that had competed hard to win its business.

According to the report, which cited people familiar with the discussions, it was expected to pay just 3.25 per cent of the money it raised in the IPO to the banks.

This would be the lowest rate for a technology company since Facebook Inc last May, which paid 1.1 per cent. Twitter was currently set to raise $1 billion, but that could change once the company started shopping its shares directly to investors.

According to the people quoted, the share deal was expected to move forward in the next few weeks.