Airbnb is raising $1bn of senior debt, just one week after announcing an equal-sized funding round from the investment firms Silver Lake and Sixth Street, further bolstering the travel company’s reserves as it faces a steep drop-off in business.
Apollo Global Management, Owl Rock Capital, Silver Lake and Sixth Street were among the investors participating in the new offering, said people briefed on the matter.
Airbnb has raced to shore up its balance sheet as the global coronavirus outbreak puts a pause on travel, inflaming tensions with rental hosts and throwing doubts on the company’s timeline for a public listing.
The wave of cancellations has weighed on finances that for years had stood out compared to cash-burning private tech peers such as Uber. Last year, the company produced positive cash flows in all four quarters and had about $3bn in cash and equivalents at its disposal, people briefed on its finances have said.
Airbnb is now projecting it can return to 2019 levels of revenue by next January, the Financial Times reported.
The new five-year loan carries an interest rate of 7.5 percentage points above the risk-free rate and is senior to the debt Airbnb raised last week, said people familiar with the deal. The company attracted about $2.5bn of interest from investors for the offering, one of the people said.
The investors declined to comment.
Brian Chesky, Airbnb chief executive, said in a statement late on Tuesday: “All of the actions we have taken over the last several weeks assure that Airbnb will emerge from the storm of the pandemic even stronger, regardless of how long the storm lasts.”
The debt and equity funding round announced last week followed discussions with more than a dozen investors as Airbnb’s business came under pressure in March.
People briefed on that deal said Airbnb agreed to pay interest rates of more than 10 per cent and granted investors equity warrants valuing the company at about $18bn.
Airbnb, which had been valued at $31bn during a funding round in 2017, was expected to complete one of this year’s largest public listings, but the plan has now been thrown into doubt by coronavirus. The company had at one point been leaning toward a direct listing, in which no new money is raised.
Goldman Sachs and Morgan Stanley advised Airbnb on the latest debt offering.