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Breakingviews: Uber-audacious

Friday, December 05, 2014 - 02:45

Following a fundraising that values it at over $40 bln, Uber is in talks to sell a bold form of convertible debt. Breakingviews columnists discuss whether investors are being taken for a ride.

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So just taking my Hoover's arriving but so is something like one point two billion dollars in new money. To the company behind the incredibly popular. Ride taxi sharing app so we come to the race. We had television is one point two billion they may raise an additional funds from the in this track and they're also gonna reason of their. Billion or more in convertible debt so this is the funny thing so a convertible bond is usually you know you get to buy the stock at a certain point and you get a little bit of an interest rate along the way. It's called conversion premium and it's kind of it's a public company. Yeah and the other thing also is that it's the south doesn't reach that point you get your money back right and indicate interest. What they're saying is well Rebecca did instead we gonna get is you're going to be able to buy stock at twenty to 30% below what the prices at the time of the IPO what a discount. Right except we don't know that not accept that doesn't matter where goes public yeah maybe they'll probably get like 20s% below. There was this latest series bond financing it not right yet and you still you're guaranteed to get it at a point is that this is back. But the problem courses that fit if it goes much much higher of course you know you could opponent this round at an evaluation of forty billion right the company used eighty billion mean you've doubled your money. If big if the company does go public at you know hundred billion and then you're not doing and I assume that the coupon on this is pretty low. Yeah I mean this is its ultimate isn't this like cougars what did you busy saying. Flipping the bird development critics about the things that mountain division this fundraising round which. Which doubles there valuation in less than a year turn it over forty billion items including new money. It's pretty amazing given the context of everything that's been going on right everyone's been all exercised about the fact well stipulate. The fourth estate has been exercised because of some suggestions that they they could if they wanted to sort of look at what journals were doing. If at all sorts of other sort of stuff always has brought this culture of arrogance and it's been kind of but apparently it's a culture of arrogance combined with the rising guys investors and consumers and different constituencies Olson to. Really see this company in a different way and yet. The one thing that is clear is evaluation just keeps kids convertible I mean like I get out. Kate into the series a to Z financing that much for doing a private basis to that but generally hedge funds like these because you can separate into adult and pray you can short one thing you can. You you can basically take out the component pardons yet you can't do that is no way to heads this that in they had team you're just you're making about that basically you run into this company and and hey get a discount the IPO price that's that's about it all comes died an affiliate news talk to me. Or back more breaking news next week.

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Breakingviews: Uber-audacious

Friday, December 05, 2014 - 02:45