2016-06-16 — businesstimes.com.sg
Uber's latest plan is to borrow up to US$2 billion from US leveraged-loan investors. While the company's plans for the cash are unclear, most of its money has ultimately gone toward the same goal, which is to claim market share by undercutting its competitors with lower prices.
While this approach makes sense if the company is able to consolidate enough business, it has caused Uber to burn through cash.
The good news is that people are still extremely willing to lend. Uber is looking at paying a rate of 4.5 per cent or less on the loan it may receive, which is lower than average yields on similarly rated new loans that range up to 5.5 per cent, according to the Wall Street Journal, which cited sources familiar with the matter and S&P Global Market Intelligence LCD data.
There's no way Uber could have started and thrived without the cheap cash it has been able to collect from a growing pool of eager investors, almost no questions asked.
If Uber borrows US$2 billion, it would take the money Uber has raised to roughly US$15 billion.
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