Twitter Inc (TWTR) Seeking $1.5 billion in Convertible Debt for Expansion

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Twitter Inc (NYSE:TWTR) is seeking to finance its expansion plan through a convertible debt by selling off two $650 million bonds with one of the bonds maturing in 5 years while the other in 7 years. This is according to a filing to the U.S. Securities and Exchange Commission. If the involved banks go ahead to exercise overallotment, the bonds could gather $1.5 billion.

According to many financial analysts, Twitter Inc (NYSE:TWTR) isn’t expected to mint profits this year. This is seen as one of the reasons why the company is seeking to implement a huge investment plant to help attract more users. The company has been working on improving its advertising business and has also roped in more engineers to help enhance the microbloggging platform.

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In a statement issued by the company, it isn’t very clear what expansion plans are underway to drive the company to seek such a huge debt.

Many however believe that Twitter Inc (NYSE:TWTR) wants to make new acquisitions in order to improve its cash flow and to expand its revenue base. The company already made some acquisitions this year, just like some other tech companies like Google and Netflix. The companies that have already been acquired by Twitter Inc (NYSE:TWTR) in 2014 are Gnip, Nano Media, TapCommerce and Mitro. Gnip is a social data provider; both Nano Media and TapCommerce deal with mobile Apps while Mitro deals with password security.

The decision by Twitter Inc. to go for the debt comes only two months after Anthony Noto, a former Goldman Sachs Group Inc. banker, replaced the company’s chief financial officer. Sources reveal that it’s Goldman Sachs and Morgan Stanley (MS) that are leading Twitter’s debt offering.

Efforts to secure a comment from Natalie Miyake, a spokeswoman for Twitter, were futile as she declined to comment.

This article has bee written by Victor Ochieng.

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