Ride-hailing giant Uber has said that it is raising USD 750 Mn/ The private debt placement will come in the form of senior notes offering that will come due in 2027. The proceeds from the funds will be used to fund part of its purchase of its MENA rival Careem.
The proposed Uber-Careem merger goes for USD 3.1 Bn. Recall that the purchase will be funded with USD 1.7 Bn in convertible notes and USD 1.4 Bn in cash.
Uber is raising the USD 750 to fund the cash portion of the transaction. This means the ride-hailing firm is funding a larger chunk of the acquisition with debt. Meanwhile, the firm finished the second quarter of this year with USD 13.7 Bn in cash and cash equivalents.
It’s only roughly been 4 months since the company IPO’d. One of the most anticipated listings of 2019, the development got Uber around USD 8 Bn in net proceeds. It raised another USD 500 Mn through a private placement with PayPal days after the IPO.
The company received another USD 1 Bn from Toyota, Softbank, and Denso in July. One would expect that securing almost USD 10 Bn since May would be sufficient money to do just about anything. But, as apparent, one would be wrong.
It’s important to note at this point that Careem deal has come under various threats. Going after another raise to fund its ambitions means Uber sees the light at the end of the tunnel.
The USD 750 intention comes just 24 hours after Carlofonia joined the company- threatening pack. The state passed a deal reportedly to turn the business model on its end. Apparently, California wants to make it hard for Uber to call its drivers “independent contractors” rather than employees.
This firm is known for dramatically burning cash. It’s reported that even after its IPO and subsequent funding rounds, the company is still in a fix. The firm may have no other option than to pay cash for notes. That’s if Careem shareholders don’t elect to convert into Uber stock at the predetermined price of USD 55 within a 90-day issuance.
image courtesy: technovagh
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