This time it was Uber Technologies Inc, the ride-hailing company that’s reshaped the taxi business around the globe. The company is seeking a US$1.25 billion (RM4.89 billion) loan and its new Chief Executive Officer Dara Khosrowshahi was there flanked by other senior management to pitch investors both the deal — and the Uber dream.
And given Uber’s cash burn and annual loss, investors were asked to assess the company by other metrics: Uber’s management touted its US$10 billion liquidity position, as well as its US$5.7 billion of pro-forma cash. Equity investors have valued the company at US$54 billion in the latest funding round from a SoftBank Group Corp.-led investor group. That makes Uber the biggest venture-backed technology enterprise without a stock listing.
Invited to the meeting on the 20th floor of the prestigious hotel overlooking Fifth Avenue were financiers from all over Wall Street, from Apollo Global Management to Bain Capital to BlackRock Group. Also among the group were Silvermine Capital Management and Golub Capital.
Uber was looking to borrow directly from investors, bypassing the traditional route of using banks to fan the loan among other lenders. That’s a first in recent loan-market history and a departure from the way borrowers typically work with banks who leverage relationships with institutional investors. Morgan Stanley, which led the group that made Uber’s first syndicated loan in 2016, is just serving as an adviser on this sale.
Investors have been willing in the past to put aside the financial benchmarks they normally live by and put up their money. Take Tesla Inc, whose CEO Elon Musk helped the electric-car maker sell US$1.8 billion of bonds in an oversubscribed deal. Netflix Inc, which like Tesla is burning through cash after accounting for necessary capital expenditure, sold debt in October. Helping all three is a wide-open credit market where investors are hungry for yield after years of depressed interest rates.
Upon arrival yesterday, each investor was given a numbered presentation and instructions to return the material at the end. The pitch, somewhat light on financial details, was steered by a more casually dressed Khosrowshahi, who said Uber was improving its governance ahead of the IPO planned for the second half of next year. He also said the company was making efforts to repair the brand, after the company has earned a reputation as a morass of malfeasance thanks to everything from lawsuits to sexual-harassment allegations and criminal investigations.
In a second call, Uber went into more detail on the company’s finances.
A representative for Uber declined to comment beyond the San Francisco-based company’s earlier confirmation of the loan. A representative for Morgan Stanley declined to comment.
Uber is pitching the seven-year loan to pay about 4.25 percentage points to 4.5 percentage points above the London interbank offered rate, according to one of the investor calls hosted by the company.
What makes Uber atypical for a leveraged loan borrower is its lack of earnings. Of particular importance to investors is a measure of debt relative to earnings used to gauge the riskiness of the loan. With its fast cash burn, Uber generated negative adjusted pro-forma earnings before interest, tax, depreciation, and amortisation, or Ebitda, to the tune of negative US$2.2 billion last year, according to documents seen by Bloomberg News. That makes a leverage ratio basically meaningless. — Bloomberg
Source: The Malay Mail Online