BusinessWeek's Spencer E. Ante reports that Facebook has been trying to secure as much as $100 million in debt financing over the past few weeks, at a time when banks and other lenders are
becoming more cautious about extending credit to companies. Facebook is aiming to use the credit lines to help it finance leases for the growing number of computers needs to run its popular Web site.
As Ante notes, such leases are a common way to finance equipment purchases in Silicon Valley. The social network has been shopping for credit from a large number of financial institutions, including
Bank of America, its primary commercial bank, which just received $25 billion to shore up its balance sheet from the federal government. According to Ante's sources, Facebook has not yet secured new
debt financing from BofA or any other lender.
Yet Ante raises questions about the timing of Facebook's debt offering, but Facebook maintains that its effort to find new financing is simply
part of the normal course of business. "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. "Along
with other Silicon Valley companies, we rely on a range of tools to do so, including equipment lease lines to acquire equipment."
Why does the company need more money now? Ante points out
that Gideon Yu, Facebook's chief financial officer, has already raised more than $500 million, "an enormous amount for a startup." One obvious question is whether Facebook has enough money stockpiled
to maintain its current strategy of growth over revenue. Facebook declined to comment, but Ante notes that a month ago, Facebook board member Peter Thiel said the company did not need to raise more
cash.
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