Hallelujah! The Facebook scoop I’ve been sitting on for days was just published last night on BusinessWeek’s Web site. Check out the top of the story here:
Facebook Is Hunting for More Money
The social-networking site wants as much as $100 million in debt financing, sources say. Facebook’s accelerating user growth carries huge tech costs
By Spencer E. Ante
Facebook, the fast-growing social-networking Web site, is one of the many companies looking for additional financing as banks and other lenders become increasingly careful about extending credit.
Over the past few weeks, Facebook has been trying to secure as much as $100 million in debt financing, according to two sources with knowledge of the proposed transaction. Specifically, the company is looking for a handful of credit lines that would help it finance leases for the growing number of computers it needs to run its popular Web site. Such leases are used by well-known companies, including Google’s (GOOG) YouTube video service, and are a common way to finance equipment purchases in Silicon Valley.
Facebook has been shopping for credit from a number of large financial institutions, including Bank of America (BAC). The Charlotte-based bank, already Facebook’s primary commercial bank, received $25 billion from the federal government as part of the effort to relieve the credit crisis. Facebook has not yet secured new debt financing from Bank of America or any other lender, according to the sources. It is continuing to try to line up credit lines for leases and is considering other forms of debt.
A Facebook spokesman says the effort is simply part of the normal course of business. Equipment leases offer lower up-front costs and certain other advantages over purchases. “Facebook always seeks to keep its costs of capital as low as possible, particularly in these uncertain economic times,” the company said in a statement issued to BusinessWeek. “Along with other Silicon Valley companies, we rely on a range of tools to do so, including equipment lease lines to acquire equipment.”