News

Uber to raise $750 million in debt financing to fund its purchase of Careem

Uber today has announced that it will raise $750 million in debt financing primarily to fund its pending acquisition of Dubai-based Careem.

“[Uber] proposes to offer $750 million principal amount of Senior Notes due 2027, subject to market conditions and other factors,” said Uber in a statement today.

The American ride-hailing giant that listed on the New York Stock Exchange in a flop IPO four months ago and continues to struggle had announced in March earlier this year that it is acquiring its Middle Eastern rival Careem for $3.1 billion in a cash and stock deal. Uber at the time had said that the deal consists of $1.7 billion in convertible notes and $1.4 billion cash.

Uber apparently needs the money to fund the cash portion of the deal that is expected to close in January 2020.

According to Uber’s SEC filings, the majority of Careem convertibles will be issued to Careem stockholders upon closing of the deal, and will mature 90 days after their respective dates of issuance. The Careem convertible notes are convertible into shares of Uber’s common stock at a price of $55 per share (Uber is currently trading at $34.3).

The filings also explain that the notes are convertible only at the election of each note holder and that some may elect not to convert their notes prior to their maturity. In this case, Uber be required to repay such notes in cash so it might end up needing a lot more than $1.4 billion of cash to fund this¬†deal. It is very likely that many of these noteholders will prefer to go home with cash instead of betting on Uber’s stock (in the long-run) because of company’s poor-run at the NYSE. It still has a few months to turn things around, though.

The Uber-Careem deal, as MENAbytes reported last week, has also faced another setback as it failed to get a green-light from Qatari authorities.

Zubair Naeem Paracha

Founder at MENAbytes
A tech and startup enthusiast based in Riyadh. Zubair apart from leading MENAbytes is also building Qraar, a career discovery and development platform for millennials in MENA. He can be reached on Linkedin, Twitter or zubair [at] menabytes [dot] com.

MENAbytes covers tech and digital media stories from Middle East North Africa

We are trying to bring you all the latest happenings from startups to influencers, everything in tech and digital media from the region.

Copyright © 2017 MENABytes

To Top
X
115 Shares
Share115
Tweet
Share
WhatsApp
Email