Google Files First Debt Offering For $3B
Larry Page wants some more money. Around$3B more infact. The new CEO is looking into the corporate bond markets for moolah, for the first time in the company's history.
Why does Google need more money?
There was a 54% spike in corporate spending last quarter. The company also expects to make 'significant capital expenditures.' (Just to give you a perspective, Google bought 48 companies last year).
The Mountain View, California-based Search giant has also been on a hiring spree. On a worldwide basis, Google employed 26,316 full-time employees as of March 31, 2011, up from 24,400 full-time employees as of December 31, 2010. Not only that, the company also recently increased base pay for its employers by 10%.
The company is however rather cash-rich. As of March 31, 2011, it sat on a pool of cash, cash equivalents, and marketable securities worth $36.7 billion.
Details of the public offering
The pricing of its public offering stands at $3B aggregate principal amount of notes. This is split into $1B of notes at 1.25% due 2014, $1B of notes at 2.125% due 2016 and $1B of notes at 3.625% due 2021. The company issued a press release to this effect, and filed a subsequent Form 8-K (Current Report) with the Securities and Exchange Commission.
Moody's Investor Service assigned the offering an AA2 rating.
Google expects to receive net proceeds from this offering of approximately $2.97B, after deducting underwriting discounts and estimated offering expenses. The company intends to use the net proceeds to repay outstanding commercial paper and for general corporate purposes, it says.
Citigroup Global Markets, Goldman, Sachs, J.P. Morgan Securities, Merrill Lynch, Pierce, Fenner & Smith, Credit Suisse Securities (USA), and Morgan Stanley are acting as joint book-running managers for the offering.