Twitter Inc. is planning to raise about $1.5 billion in its first sale of debt. The company, which went public in November 2013 and is still unprofitable shared that it intends to use the proceeds to invest in future acquisitions and expansion. A spokeswoman of the company – Ms. Natalie Miyake – refused to make any comments on the debt sale beyond the official news release made by Twitter.
The companys decision to issue debt comes only a couple of months after Mr. Mike Gupta was replaced at the position of Chief Financial Officer by Mr. Anthony Noto – a former banker of Goldman Sachs Group Inc., who helped Twitter with its Initial Public Offering.
One of the analysts at SunTrust Robinson Humphrey Inc. – Robert Peck commented for Bloomberg: “This is Noto’s first real impact on the company. He’s smart, he’s financially savvy, and understands that whenever the markets give you an opportunity to raise capital that cheaply, you’ve got to either stuff your coffers for a rainy day or make an acquisition.”
According to a securities filing posted by Twitter on Wednesday, the company is to offer convertible bonds in two lots estimated to $650 million each, which will mature in five and seven years respectively. Convertible notes pay interest like a bond, but they can also be converted into common shares under specific conditions. Twitter also revealed that initial buyers will be provided with the opportunity to buy an additional $100 million in each of the offerings.
Twitter has been focused on investing in the consolidation and expansion of its advertising business through acquisitions and adding engineers, who can help the microblogging company offer more attractive products to a wider range of people. A credit line estimated to $1 billion was secured by Twitter ahead of its Initial Public Offering that took place on November 6th 2013 and raised about $2 billion.
Twitter Inc. rose by 4.45% on Wednesday in New York to close at $52.91 per share, marking a -16.87% year-to-date change. The company is valued at $31.14 billion. According to CNN Money, the 29 analysts offering 12-month price forecasts for Twitter Inc. have a median target of $55.00, with a high estimate of $65.00 and a low estimate of $28.00. The median estimate represents a +3.95% increase from the last price of $52.91.
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