Recently, Airbnb has confirmed the commitment of $1BN from institutional investors as a syndicated term loan. The arrival of emergency funds is made with a further hammering of Coronavirus travel freeze holiday rental agencies, which forbids or seriously discourages vacationers at home and overseas travel for reasons of public safety.
Neither the names nor the terms of the Airbnb loan were released, but Reuters – regarding multiple sources of information of the issue – claims that Silver Lake, Apollo Global Management, Sixth Street Partners, Oaktree Capital Management and Owl Rock are participants, with Silver Lake being “one of the key players”. Still, all of them declined about this fact and don’t added any comment on this.
According to Reuters, the loan is five years long, with a 750 basis point interest rate over the index of Libor, which we consider to be right. It was also reported that the news agency was sold at a small discount on the loan’s par value that would allow investors to gain about 12%. Since the terms of the agreement are lien loans, the creditors listed will be compensated by Reuters’ sources in the first place should Airbnb default.
From the officials of Airbnb, it was found that this month, the holiday rental giant had reported a $1BN raise in debt and equity with Silver Lake and Sixth Street Partners, two of the above listed private equity companies. Though it said at the time the funds will help its long-term investment research — making the raise structural rather than a bailout in difficult times.
The $1BN revolving loan will more specifically counter the potential adverse effects of COVID-19. In a post-pandemic future, the comment by Airbnb again attempts to paint an up-to-date image of journeys without being able to say when this period will arrive specifically.
I respect the confidence and the interest displayed by all of us in our business even when the travel industry encounters the pandemic wind. We believe that travel will come back and instead of only diminishing, our funding will allow Airbnb to move forward while we invest in our community, “said Brian Chesky, CEO of Airbnb. The actions we have taken in recent weeks mean that Airbnb will rebound even better from the pandemic epidemic regardless of how long the crisis continues.
The cash infusion “must ensure that Airbnb is able to afford to invest in its business and guest culture in more than 220 countries and regions worldwide.” Airbnb became furious in recent weeks after hosting a surge of cancelations and refunds for Coronaviruses arrived after making a policy adjustment last month where visitors were entirely refunded on reservations for the duration of Coronavirus. This was also set aside $250 million for hosting cancels caused by COVID-19.
Some countries have already absolutely banned holiday rentals during the pandemic, like Britain that has been clamped down lately after hosts consider advertising ‘isolation retreats.’ Some markets, such as London, have also reported an uptick in long-term leases, as professionals employed on platforms such as Airbnb are finding an alternate income source for vacant vacation rentals which are costing them the money.
One thing is clear; Airbnb’s IPO expectations have been heightened by the global travel rush. The firm told creditors, workers, and the world last September that it is going to start publicly trading in 2020. A few months late Coronavirus struck and Airbnb saw its valuation drop in 2019 from a $35BN high.
According to Reuters, the $1BN bond offering last week contained guarantees for both firms that could exercise a premium of $18BN, far less than Airbnb, which was listed as an internal assessment at the start of March.