(Reuters) – Airbnb Inc’s new $1 billion investment from private equity firms Silver Lake and Sixth Street Partners has terms that imply a reduced valuation of the home rental company, people familiar with the matter said on Tuesday.

Silver Lake and Sixth Street received warrants that can be exercised at an $18 billion valuation, below the $26 billion Airbnb was valued in early March in its internal valuation, one source said.

The deal was seen as a sign of investor support as the coronavirus grinds global travel to a near-standstill, and the sources said Airbnb will terminate a $1 billion credit facility following the investment, the sources said.

The deal is comprised of $1 billion in five-year debt yielding 11% to 12% and warrants that can convert into stock equating to a little over 1% of Airbnb’s total equity, the sources said. They requested anonymity as the terms are confidential.

The deal raised Airbnb’s cash reserves to around $4 billion. [nL4N2BU3PH]

In March, Reuters reported the U.S. short-term home rental platform held a phone meeting with lenders to discuss extending an existing $1 billion debt facility, which was led by Bank of America (BAC.N), amid a slowdown in demand due to the coronavirus pandemic.

Airbnb is now also in talks with banks about a new line of credit that could be worth as much as $750 million or $1 billion, one source said.

Airbnb was valued at $31 billion in its most recent private fund-raising round.

Silver Lake is targeting a valuation for Airbnb of $40 billion to $50 billion to hit its return target, one of the sources said, declining to provide more details.

Airbnb, Silver Lake, Sixth Street and Bank of America declined to comment.

Reporting by Joshua Franklin in New York; Editing by Tom Brown and Rosalba O’Brien

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