Amazon Gets $2 Billion Credit Facility for Investments

Amazon.com Inc. (AMZN) revealed that it has secured a $2 billion credit facility from Bank of America Corp. (BAC).

The agreement spans a couple of years. However, depending on the lenders, it could be extended for three additional one-year terms. Amazon will be charged an initial interest rate of LIBOR+65 basis points, along with a commitment fee of 6 basis points on the portion of the credit not drawn.

Amazon stated that the borrowings, as per the agreement, might be utilized as working capital and for capital expenditures, acquisitions and other corporate purposes.

The company is concentrating on international expansion, with investments in countries like China, India, Spain and Italy. It has already committed to invest $2 billion in its operations in India.

The funds will help the company to invest in its ever increasing portfolio of business ventures.

The agreement was revealed a month after Amazon reported a second-quarter loss of $126 million. The company also announced recently that its CFO, 53-year-old Tom Szkutak, will retire next June. Brian Olsavsky, Vice President of Finance for Amazon’s global consumer business, will succeed him.

Amazon recently acquired Twitch, a service that allows users to watch and broadcast video game play, in a bid to rival Google’s (GOOGL) YouTube, which offers live streaming of gameplay and competitive live streams.

Recently Amazon was targeted by the FTC for unwarranted in-app purchases made by children. However it is not willing to resolve the issue by paying the fine.

Amazon currently has a Zacks Rank #4 (Sell). Better-ranked stocks in this industry include Mercadolibre, Inc. (MELI) and World Energy Solutions, Inc. (XWES) , both of which sport a Zacks Rank #1 (Strong Buy).