Two weeks ago, we reported that Uber was in talks to raise $1-2 billion in leveraged loans. The Wall Street Journal is circulating new information that the company has closed a $1.15 billion leveraged loan, with a 5 percent yield.
This number comes in on the low side of our previous estimates. Last month, sources confirmed to TechCrunch that Uber had plans to raise $1-2 billion in leveraged loans.
Uber initially targeted a 4-4.5 percent yield but ended up settling on 5 percent. In the last month, the company has brought in $4.65 billion in capital from debt and equity investments. A $3.5 billion equity round from the Saudi Arabia Public Investment Fund preceded today’s leveraged loan led by Morgan Stanley. The loan also contained money from Barclays PLC, Citigroup Inc. and Goldman Sachs Group Inc according to the Wall Street Journal source.
All the capital originates from multinational institutions. This hints that CEO Travis Kalanick plans to add the money to his growing war-chest to fight Chinese ride-sharing rival Didi Chuxing.
Uber likely opted for the leveraged loan to avoid further dilution. The company has little in collateral to comfort bankers issuing debt. For reference, Apple, a publicly traded mature tech company, has previously issued bonds at a 3.22 percent blended interest rate excluding floating rate debt.
One more perk for Uber, private debt, like this leveraged loan, does not have to be publicly disclosed.
We have reached out to Uber for comment and will update with information if it becomes available.