Uber (private Car Rental Application Company) is in talks to sell more than $1 billion in convertible debt, a source familiar with the matter said, soon after the U.S. taxi service said it raised $1.2 billion in its latest funding round. The new funding, which valued the firm at $40 billion, the planned debt sale and a previous $1.2 billion funding gave Uber more flexibility around the timing of an initial public offering, the source said. The debt will convert into equity at a discount of about 20 to 30% to the IPO price, the source said, adding that the discount increases after year one if Uber has not gone public. The coupon increases after year four, the source also said. “We have just raised a financing round of $1.2 billion, with additional capacity remaining for strategic investments, Chief Executive Travis Kalanick said in a blog post on Thursday.
Kalanick did not give details on the equity funding nor say who made the investment in the ridesharing company, which counts Goldman Sachs and Google Ventures among its existing investors. Uber filed to authorize up to $1.8 billion of new Series E preferred stock, Fortune said in report published before the CEO's blog. Kalanick said the equity funding would allow Uber to make investments, particularly in the Asia Pacific region, and help it generate over 1 million jobs in 2015. Uber was valued at $18.2 billion in June when it raised $1.2 billion from mutual funds and investors, including Fidelity Investments, Wellington Management and BlackRock.