Facebook looks for more credit with the banks
Social network wants cash for bumper tax bill after IPO
Facebook is planning to add a few extra bucks to its $2.5bn credit line to help cover the major tax bill for employee stocks when it goes public.
The social network, which already upped its credit just six months ago, is taking more cash while it can get it, sources told Reuters.
Facebook has said that it will foot the tax bill for its employees' restricted stock units (RSUs) when they vest (become shares) six months after it goes public. Employees are currently holding RSUs, which are basically promises of shares, which will then become shares on the vesting date. The income realised by vesting the RSUs is taxed.
Facebook is going to help cover its staff taxes on the RSUs, a move which is relatively unusual, giving it a hefty tax bill that will likely be billions of dollars.
The social network said in its IPO filing that it could sell more shares to pay the taxes, tap into its credit facility or use its cash.
Facebook set up a line of credit with a number of banks in February last year for $1.5bn, and then upped that to $2.5bn in September.
But the firm is looking pretty darn good at the moment as investors salivate in anticipation of its IPO, which would make it a good time to ask the banks for more cash.
Facebook declined to comment. ®
And they go bust when???
I look forward to the day it happens
Is this an example of when the State (Federal AND Calif) governments reap...
LOL "The title is too long." So THAT's where some of the recovered chars came from....
"Is this an example of when the State (Federal AND Calif) governments reap a windfal for little input?"
Don't misunderstand, but I feel that paying "reasonable" taxes is a fair demand than paying into something that extracts far more than the work it puts in.
For example, if a company generates a product or service, it might already know it is to pay an effective 45% tax on profits. But, it is most likely limited on how much it can write down, deduct, and so on. So, in the case of a fb, having earned or raised tons of money suddenly becomes a taxable event 'just because' a transaction took place.
But, for fb to help its "staff" (all employees?) who have those RSUs cover their taxes means (I suppose) fb is using the staff's taxes as another way to increase its upfront cash outlays or write-down costs. Maybe, though, the IRS could get painful and just go after the employees anyway, claiming they received a taxable benefit by virtue of fb relieving them of paying a tax that is over $400 or $600 (or whatever the current amount is).
As for the banks, unless they have hands reaching deep into prospective fortunes of fb, other than having good face time and future relations with fb, why would they want to lend fb hundreds of millions to cover taxes which will be in the billions? Of course, they surely don't expect fb to implode or become the next GoDaddy or Yahoo! or friendster in the next 2 years, so some banking official at each bank will stand to reap a huge bonus if fb's loan generates a huge quarterly and annual interest rate income stream... Hmm, maybe I answered my own question....
Obviously taking lessons from Kent..
28 December 2011
Phorm, Inc. ("Phorm" or the "Company")
Phorm (AIM: PHRM and PHRX) announces that on December 28th Kent Ertugrul, CEO and Chairman of the Company, transferred for nil consideration 2,594,412 shares in the Company to Value Trust Holdings Pte Ltd limited for tax planning purposes.
Well done 'that man'. Good to see you taking care of 'business'.
urrrrm whorrrp etc...
Presumably Apple has a patent on such activities. Narf Narf.