Summary
This 8-K filing from Facebook (now Meta Platforms) on October 15, 2012, details the amendment and restatement of its bridge credit facility. The company entered into an Amended and Restated Term Loan agreement, allowing it to borrow up to $1.5 billion. The primary purpose of this facility is to fund tax withholding and remittance obligations associated with the vesting of restricted stock units (RSUs) following its initial public offering. This move provides the company with a significant liquidity source to manage these upcoming tax liabilities.
Key Highlights
- 1Facebook amended and restated its bridge credit facility, creating an unsecured term loan of up to $1.5 billion.
- 2The primary use of the new credit facility is to fund tax withholding and remittance obligations for RSUs vesting in October and November 2012.
- 3Approximately 271 million RSUs are expected to vest, with an anticipated average withholding tax rate of around 45%.
- 4The company expects to use borrowings from this facility to cover roughly half of the total tax liability for these RSUs.
- 5Interest on borrowed amounts will be based on LIBOR plus 1.0%.
- 6The company also amended its existing $5.0 billion revolving credit facility to ensure consistency with the new term loan and obtain lender consent.
- 7Any outstanding amounts under the new term loan will be due on the third anniversary of the initial borrowing.
Frequently Asked Questions
The primary purpose of the $1.5 billion Amended and Restated Term Loan is to provide liquidity to cover significant tax withholding and remittance obligations related to the upcoming vesting of Restricted Stock Units (RSUs) following Facebook's initial public offering.
Facebook expects to use borrowings under the Amended and Restated Term Loan to cover approximately half of the total withholding tax liability that will arise from the vesting of approximately 271 million RSUs.
Interest on borrowed amounts will be payable at the London Interbank Offered Rate (LIBOR) plus 1.0%. The company also paid origination fees, and is obligated to pay an additional upfront fee of 0.15% on borrowed amounts and an annual commitment fee of 0.10% on the undrawn balance.
Yes, Facebook entered into an amendment to its existing $5.0 billion revolving credit facility. This amendment secured the lenders' consent for the new term loan and ensured that the negative covenants in both facilities are consistent.