Author Topic: SpaceX corporate fundraising rounds  (Read 202342 times)

Offline ncb1397

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Re: SpaceX corporate fundraising rounds
« Reply #20 on: 11/06/2018 02:37 pm »
Bloomberg..

Quote
SpaceX Seeks $750 Million Loan Via New Arranger BofA

Elon Musk’s rocket company SpaceX is planning to launch a $750 million leveraged loan this week, which will now be led by Bank of America Corp. instead of Goldman Sachs Group Inc., according to people with knowledge of the matter.

Bank of America has scheduled a Nov. 7 presentation for potential investors, said the people, who asked not to be identified because the transaction is private.
>

That is a pretty massive loan. Equivalent to almost half of 2019 revenue. The leveraged loan term used is also somewhat worrying. Might just be Musk's tendency to take everything to 111%. If a $500 million dollar loan was prudent, why not $750 million.

Quote
A leveraged loan is a type of loan that is extended to companies or individuals that already have considerable amounts of debt and/or a poor credit history. Lenders consider leveraged loans to carry a higher risk of default, and as a result, a leveraged loan is more costly to the borrower. Leveraged loans for companies or individuals with debt tend to have higher interest rates than typical loans; these rates reflect the higher level of risk involved in issuing the loan.
https://www.investopedia.com/terms/l/leveragedloan.asp
« Last Edit: 11/06/2018 02:54 pm by ncb1397 »

Online envy887

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Re: SpaceX corporate fundraising rounds
« Reply #21 on: 11/06/2018 03:01 pm »
Bloomberg..

Quote
SpaceX Seeks $750 Million Loan Via New Arranger BofA

Elon Musk’s rocket company SpaceX is planning to launch a $750 million leveraged loan this week, which will now be led by Bank of America Corp. instead of Goldman Sachs Group Inc., according to people with knowledge of the matter.

Bank of America has scheduled a Nov. 7 presentation for potential investors, said the people, who asked not to be identified because the transaction is private.
>

That is a pretty massive loan. Equivalent to almost half of 2019 revenue. The leveraged loan term used is also somewhat worrying. Might just be Musk's tendency to take everything to 111%. If a $500 million dollar loan was prudent, why not $750 million.

Quote
A leveraged loan is a type of loan that is extended to companies or individuals that already have considerable amounts of debt and/or a poor credit history. Lenders consider leveraged loans to carry a higher risk of default, and as a result, a leveraged loan is more costly to the borrower. Leveraged loans for companies or individuals with debt tend to have higher interest rates than typical loans; these rates reflect the higher level of risk involved in issuing the loan.
https://www.investopedia.com/terms/l/leveragedloan.asp

They have two GPS flights, two Heavy flights, 9 commercial F9s, and 3 Cargo Dragon flights. 2019 revenue should be around twice that before any CC milestone payments. Not sure how much those CC payments are but they could plausibly add another $500 million or more.

Offline Robotbeat

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Re: SpaceX corporate fundraising rounds
« Reply #22 on: 11/06/2018 03:04 pm »
This is good. It'll allow them to do Starlink and BFR much faster while still being on their own terms.
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Offline docmordrid

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Re: SpaceX corporate fundraising rounds
« Reply #23 on: 11/06/2018 03:13 pm »
>
That is a pretty massive loan. Equivalent to almost half of 2019 revenue. The leveraged loan term used is also somewhat worrying. Might just be Musk's tendency to take everything to 111%. If a $500 million dollar loan was prudent, why not $750 million.
>

There have been large leveraged loans taken by companies which are not stressed, so I wouldn't attach much negativity to it.
DM

Offline acsawdey

Re: SpaceX corporate fundraising rounds
« Reply #24 on: 11/06/2018 03:18 pm »
This is good. It'll allow them to do Starlink and BFR much faster while still being on their own terms.

And getting out in front of the other LEO internet constellations (with better technology) makes it likely that competition will not materialize at all.

Offline su27k

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Re: SpaceX corporate fundraising rounds
« Reply #25 on: 11/06/2018 03:35 pm »
The leveraged loan term used is also somewhat worrying.

By valuation, SpaceX is the 3rd largest private tech startup in the US, 1st and 2nd are Uber and Airbnb. Uber just raised $1.5B using leveraged loans a few months ago, and Airbnb raised $1B using leverage loans in 2016. So it seems that this is pretty normal funding behavior for tech companies.

Offline deruch

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Re: SpaceX corporate fundraising rounds
« Reply #26 on: 11/07/2018 04:21 am »
The leveraged loan term used is also somewhat worrying.

By valuation, SpaceX is the 3rd largest private tech startup in the US, 1st and 2nd are Uber and Airbnb. Uber just raised $1.5B using leveraged loans a few months ago, and Airbnb raised $1B using leverage loans in 2016. So it seems that this is pretty normal funding behavior for tech companies.

Is the size of your leveraged loan the new measuring stick in Silicon Valley?
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Offline meekGee

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Re: SpaceX corporate fundraising rounds
« Reply #27 on: 11/07/2018 04:04 pm »
The leveraged loan term used is also somewhat worrying.

By valuation, SpaceX is the 3rd largest private tech startup in the US, 1st and 2nd are Uber and Airbnb. Uber just raised $1.5B using leveraged loans a few months ago, and Airbnb raised $1B using leverage loans in 2016. So it seems that this is pretty normal funding behavior for tech companies.

Is the size of your leveraged loan the new measuring stick in Silicon Valley?
Better than investment money.  It shows you have confidence in your business and in real profit and revenue generation.

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Offline jpo234

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Re: SpaceX corporate fundraising rounds
« Reply #28 on: 11/07/2018 05:53 pm »
In order to secure the loan they will have to provide prospective investors with a detailed business plan that shows how they intend to pay it back. While this will undoubtedly be under a NDA, some information from "people involved in the talks" might leak.

We should be extra vigilant over the next few weeks.
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Offline Lar

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Re: SpaceX corporate fundraising rounds
« Reply #29 on: 11/08/2018 02:54 am »
A loan allows retention of control that a large liquidity event would not due to dilution. SpaceX liquidity events tend to just reshuffle things. Musk is smart. I bet he is getting it at very attractive rates and it's unsecured.
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Offline IntoTheVoid

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Re: SpaceX corporate fundraising rounds
« Reply #30 on: 11/08/2018 03:19 am »
Quote
...SpaceX on Wednesday circulated pricing on a proposed $750 million term loan that will put cash on the company’s balance sheet, two sources said.

The company floated pricing in the 400bp-425bp over Libor range with a 0% floor and a discount of 99. The loan will have six months of soft call protection at 101
Reuters Article
« Last Edit: 11/08/2018 03:22 am by IntoTheVoid »

Offline Arb

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Re: SpaceX corporate fundraising rounds
« Reply #31 on: 11/08/2018 10:29 pm »
Quote
...SpaceX on Wednesday circulated pricing on a proposed $750 million term loan that will put cash on the company’s balance sheet, two sources said.

The company floated pricing in the 400bp-425bp over Libor range with a 0% floor and a discount of 99. The loan will have six months of soft call protection at 101
Reuters Article
Libor and bp I understand but can anyone translate the rest of the financial jargon:
- 0% floor
- discount of 99
- six months of soft call protection at 101

Offline SpaceDave

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Re: SpaceX corporate fundraising rounds
« Reply #32 on: 11/08/2018 10:32 pm »
Quote
...SpaceX on Wednesday circulated pricing on a proposed $750 million term loan that will put cash on the company’s balance sheet, two sources said.

The company floated pricing in the 400bp-425bp over Libor range with a 0% floor and a discount of 99. The loan will have six months of soft call protection at 101
Reuters Article


Rocket science, I understand - but that string of finance jargon was mostly Greek to me. Anyone here understand commercial loan terms and can explain in plain English? Thanks!

Offline Paul_G

Re: SpaceX corporate fundraising rounds
« Reply #33 on: 11/08/2018 10:44 pm »
Quote
...SpaceX on Wednesday circulated pricing on a proposed $750 million term loan that will put cash on the company’s balance sheet, two sources said.

The company floated pricing in the 400bp-425bp over Libor range with a 0% floor and a discount of 99. The loan will have six months of soft call protection at 101
Reuters Article
Libor and bp I understand but can anyone translate the rest of the financial jargon:
- 0% floor
- discount of 99
- six months of soft call protection at 101

Floor refers to the lowest interest rate the bond/load can have. As the lnterest rate is based off of a variable rate, which theoretically could below zero - eg negative interest rates like have happened in Japan.

A soft call protection of 101% means if SpaceX decide to pay back the loan within the first 6 months, they will pay back 101% of the loan amount - so that the people who make the loan still make something from the deal.

Offline jspampin

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Re: SpaceX corporate fundraising rounds
« Reply #34 on: 11/09/2018 01:20 am »
Thoughts on the timing of this loan relative to the lack of AF EELV contract for BFR?

Offline yoram

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Re: SpaceX corporate fundraising rounds
« Reply #35 on: 11/11/2018 12:52 am »
https://www.bloomberg.com/news/articles/2018-11-08/musk-said-to-divide-wall-street-with-demands-for-new-spacex-loan
Quote
While SpaceX is burning through cash, disclosures to potential lenders showed the company had positive earnings before interest, taxes, depreciation and amortization of around $270 million for the twelve months through September, people with knowledge of the matter said. But that’s because it included amounts that customers had prepaid and because it excluded costs related to non-core research and development, the people said. Without those adjustments, earnings for the period were negative, they said.

Interesting information on SpaceX financials from a recent Bloomberg article (via reddit)
I wonder if BFR development is included in "core development" here, or is it one of the excluded items?
Hopefully they improve their financials enough to finance BFR.

Offline aero

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Re: SpaceX corporate fundraising rounds
« Reply #36 on: 11/11/2018 03:23 am »
https://www.bloomberg.com/news/articles/2018-11-08/musk-said-to-divide-wall-street-with-demands-for-new-spacex-loan
Quote
While SpaceX is burning through cash, disclosures to potential lenders showed the company had positive earnings before interest, taxes, depreciation and amortization of around $270 million for the twelve months through September, people with knowledge of the matter said. But that’s because it included amounts that customers had prepaid and because it excluded costs related to non-core research and development, the people said. Without those adjustments, earnings for the period were negative, they said.

Interesting information on SpaceX financials from a recent Bloomberg article (via reddit)
I wonder if BFR development is included in "core development" here, or is it one of the excluded items?
Hopefully they improve their financials enough to finance BFR.

I did read yesterday or today an article by some market analyst that SpaceX should be included in the list of possible IPO's for 2019. Sorry that I don't have a link at hand. I personally don't think that Musk is interested in going public, to say the least.
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Offline docmordrid

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Re: SpaceX corporate fundraising rounds
« Reply #37 on: 11/11/2018 04:06 am »
>
I did read yesterday or today an article by some market analyst that SpaceX should be included in the list of possible IPO's for 2019.
>

An IPO would give the anti-Musk/anti-Tesla shorters another target. Musk would rather cut his own throat than subject SpaceX to what Tesla has had to deal with.
« Last Edit: 11/11/2018 04:08 am by docmordrid »
DM

Offline kessdawg

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Re: SpaceX corporate fundraising rounds
« Reply #38 on: 11/11/2018 03:50 pm »
An IPO would be very surprising to me based on the multiple statements by Musk that
a: He didn't want to take SpaceX public due to the increased pressure on public companies for profit NOW and that he only wants investors that would be in it for the long haul.
b: He regrets taking Tesla public.
c: He wants to maintain voting control at SpaceX.  Not being a finance guy I don't know how much more he can sell of SpaceX percentage wise and still keep control.

Offline Oli

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Re: SpaceX corporate fundraising rounds
« Reply #39 on: 11/11/2018 04:21 pm »
Quote
...SpaceX on Wednesday circulated pricing on a proposed $750 million term loan that will put cash on the company’s balance sheet, two sources said.

The company floated pricing in the 400bp-425bp over Libor range with a 0% floor and a discount of 99. The loan will have six months of soft call protection at 101
Reuters Article

So ~6.9% currently, but could get close to 10% in the years to come I guess.

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