Airbnb Inc. agreed to pay its new buyers curiosity at a fee of greater than 10%, and to strengthen its management, in return for the $1 billion in extra funding introduced Monday, in response to individuals acquainted with the matter.
The buyers may also get warrants that may be transformed into shares with a valuation for the corporate of $18 billion, a drop of just about half since Airbnb’s final fundraising in 2017, the individuals stated.
The phrases of the financing, which haven’t been beforehand reported, present the misery the home-sharing big is underneath as a result of coronavirus pandemic.
An Airbnb spokesman stated The Wall Avenue Journal’s reporting was “wildly inaccurate and fallacious” however didn’t specify what was incorrect.
A consultant of Sixth Avenue Companions didn’t instantly reply to a request for remark.
Airbnb stated on Monday that it raised $1 billion in funding from private-equity companies Silver Lake and Sixth Avenue Companions to bolster its funds, after the coronavirus pandemic upended its business model.
The San Francisco-based firm has additionally had preliminary discussions with a number of buyers about elevating extra capital, one particular person near the negotiations stated.
Airbnb had deliberate to begin buying and selling publicly this 12 months. As a substitute, it has raised cash privately at a decrease valuation than the $31 billion price ticket of its final 2017 fundraising spherical, the individuals near the corporate stated,
The $1 billion of debt comes with a steep price ticket; an rate of interest of 10% plus a benchmark fee generally known as the London interbank provided fee, or Libor, the individuals acquainted with the deal stated. Libor is presently lower than 1 proportion level. Even so, the brand new debt will value Airbnb greater than $100 million a 12 months.
The buyers have additionally extracted verbal commitments from the corporate to cut back considerably its mounted prices and to strengthen its administration, including not less than one new government to help chief government Brian Chesky, the individuals stated. Nevertheless, the administration change is a part of a verbal settlement, reasonably than being baked into the phrases of the deal, one of many individuals added.
A spokeswoman for Silver Lake stated, “We made this investment as a result of we imagine in Airbnb’s management, starting with Brian, and look ahead to partnering with them in our function as a strategic investor.”