The additional funds would give Airbnb an extra financial cushion as prospects dim for an initial public offering this year. The money could help Airbnb weather the economic crisis brought on by the coronavirus pandemic without going public, and could also allow the company to make acquisitions, a strategy it has been weighing, people with knowledge of the matter told Bloomberg last month.
Airbnb hasn’t disclosed the terms of its deal with Silver Lake and Sixth Street Partners. People familiar with the matter have said that the transaction was comprised of second lien debt, along with warrants for about 1% of the company’s equity. The warrants give Airbnb an US$18 billion valuation, one of the people said. That compares with a value earlier of US$31 billion.
Monday’s deal carried an 11% to 12% interest rate, the people said. The investment doesn’t entitle the investors to a seat on Airbnb’s board of directors, one of the people said.
Raising second lien debt, means that Airbnb has room to take on more senior debt, which it is considering. The company could also raise a convertible note or equity instead, the people said.
As the home-sharing company raises debt, it is cancelling a US$1 billion credit facility with several banks that is administered by Bank of America Corp. Those banks include Morgan Stanley and Goldman Sachs Group Inc., both of which advised on the Silver Lake-Sixth Street transaction, one of the people said. A representative for Bank of America declined to comment.
The deal announced Monday was meant to help the home-sharing company make it through the pandemic that is devastating the global travel industry, Airbnb said in a statement.
“The new resources will support Airbnb’s ongoing work to invest over the long term in its community of hosts who share their homes and experiences, as well as the work to serve all stakeholders in the Airbnb community,” the company said.
