Amazon secures $8B loan, anticipating market headwinds

Amazon secures $8B loan, anticipating market headwinds

In anticipation of market headwinds, Amazon secured an $8 billion loan.

DBS Bank, Mizuho Bank, and others provided the loan. It will mature in 364 (January 3, 2024) with an option of extension for another 364 days. The loan will be used for “general corporate reasons,” Amazon stated in a statement. Filing With the U.S. Securities and Exchange Commission. A spokesperson for Amazon stated that the loan will add to the variety of financing options that the company has used in recent months to protect against the “uncertain macroeconomic climate.”

The spokesperson stated via email that “Like all companies, we regularly evaluate and make financing decisions — such as entering into term loans agreements or issuing bonds — accordingly.” “Given the uncertain macroeconomic climate, we have used various financing options over the past few months to support capital expenditures as well as debt repayments and acquisitions.

Amazon’s income dropped towards the end of 2022, as the economy took its toll. Amazon spent billions to double the size of its fulfillment network in the pandemic. This was a smart move that worked initially, but proved to be costly.

Amazon was forced to Stopping or delaying plans As e-commerce sales grew slower than expected last year, there were more than a dozen facilities. Amazon’s business was also affected by soaring energy costs. In Q3 2022, Amazon’s shipping spending rose 10% to $19.9 Billion.

Amazon will reduce its workforce to save money in the early 2023. reportedly Up to 10,000 employees could be laid off. These layoffs would be the largest in Amazon’s history and will be concentrated in Amazon’s human resources, Alexa, and retail divisions.

Amazon also took other cost-saving measures. It stopped hiring corporate employees for its retail business, shut down Amazon Care telehealth services, and closed all of its U.S. call center. Scaled back Amazon Scout, the company’s long-running delivery robot program. These moves have not been enough to stop the company’s market capital from falling below $1 trillion for only the first time since April 2020.

Amazon had cash and cash equivalents of $35 billion and long-term debts of approximately $59 billion at September 30th, Reuters. Reports. Amazon paid $932m in cash and interest on debt for the first nine months 2022. This is an increase of $731 million from the same period last year. The interest rate spread on the new $8billion loan will start at 0.75% and rise to 1.05% if Amazon extends the loan’s maturity.

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