On Thursday Facebook Inc (NASDAQ:FB) revealed in an 8-K filing with the Securities and Exchange Commission that it had secured a new revolving credit line with JPMorgan Chase & Co. (NYSE:JPM). The senior unsecured credit line is worth up to $6.5 billion, and it is a replacement for the social network’s previous credit facilities.
Facebook pays off previous loan
Facebook Inc (NASDAQ:FB) paid off the $1.5 billion principal which had still be on the previous term loan, which had also been with JPMorgan Chase & Co. (NYSE:JPM). That loan facility had been used for paying the taxes it was charged in connection with its initial public offering last year, according to Brian Womack of Bloomberg.
In addition, the social network terminated another previous credit facility with the bank that was worth up to $5 billion.
Details about Facebook’s new credit line
The company will pay off all amounts owed under the new credit line no later than Aug. 15, 2018. According to the 8-K filing, Facebook Inc (NASDAQ:FB) will pay interest on the new loan according to the London Interbank Offered Rate (Libor), plus 1 percent.
When the loan closed, the social network paid origination fees, which will be amortized over the term of the new facility. It will also pay a .1 percent annual commitment fee on the daily amount of the facility that has not been drawn upon. As of the date of the 8-K filing, Facebook had not yet used the new credit facility.
Facebook Inc (NASDAQ:FB) said it will use the new credit facility for “working capital and general corporate purposes.” According to Bloomberg, the social network is streamlining is credit line access while strengthening its financial performance. Last month the company said sales during the second quarter climbed 53 percent, hitting $1.81 billion and greatly surpassing analyst expectations of $1.62 billion for the quarter.