10-22-13 8:45 PM EDT | Email Article

The banks underwriting Twitter Inc.'s upcoming initial public offering have officially agreed to lend it as much as $1 billion over the next five years, according to a new filing with regulators.

The $1 billion revolving credit facility, which was completed this month and will mature in October 2018, was detailed in an updated Securities and Exchange Commission filing late on Tuesday. The credit discussions had previously been reported by The Wall Street Journal and other media outlets.

Morgan Stanley (MS) and J.P. Morgan Chase & Co. (JPM) are both contributing $250 million to the credit line, and Bank of America Corp. (BAC) and Deutsche Bank AG (DB) are putting up $175 million each, according to the filing. Goldman Sachs Group Inc. (GS), which is leading the underwriting of the IPO, is contributing $150 million, the filing said.

The San Francisco-based microblogging service will pay an interest rate on any money it borrows ranging from 1 to 1.75 percentage points over the London interbank offered rate, or Libor, the rate at which banks lend to each other, the filing said. The rate depends on how much Twitter has borrowed versus how much cash profits it generates.

It is unusual for young technology companies to be able to borrow such large sums, but Twitter -- like other recent Internet companies going public -- has been able to secure funds from banks that have competed hard to win its business.

The company is expected to pay just 3.25% of the money it raises in the IPO to banks in stock offering fees, people familiar with the discussions have said. That would be the lowest rate for a technology company since Facebook Inc. (FB) last May, which paid 1.1%. Twitter is currently set to raise $1 billion, but that could change once the company begins shopping its shares directly to investors.

The share deal is expected to move forward in the next few weeks, the people familiar have said.

The credit line is being provided by the banks who have already agreed to work on the deal. Morgan Stanley is the lead agent on the credit line, which is also known as a "revolver." It is the joint lead arranger of the credit along with J.P. Morgan, Bank of America, Deutsche Bank and Goldman Sachs Group are also lending money, according to the filing.

Goldman is leading Twitter's IPO, with Morgan Stanley and J.P. Morgan also in senior roles on the deal. Bank of America Merrill Lynch and Deutsche Bank, and boutique firms Allen & Co. and Code Advisors, are also underwriting the offering.

Write to Telis Demos at telis.demos@wsj.com


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(END) Dow Jones Newswires

October 22, 2013 20:45 ET (00:45 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.
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Morningstar - 2013/10/22 - Twitter Entered Into $1 Billion Credit Facility in October
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