Oct. 6 (Bloomberg) -- Facebook Inc., operator of the world’s largest social network, plans to reduce by half a $3 billion credit line due to a decline in its tax liability, a person familiar with the matter said yesterday.

The Menlo Park, California-based company also plans to extend the term of the loan to three years from one year, said the person, who asked not to be named because the matter is private.

Facebook said in March that it secured a $3 billion 364-day bridge loan to fund taxes for employees who exercise their restricted stock units. It also lined up a $5 billion five-year revolving line of credit ahead of its initial public offering in May, according to a filing.

Facebook’s tax obligations are now lower than it had expected because the value of its shares has fallen 45 percent since the IPO. The financing was arranged by banks including JPMorgan Chase & Co., Morgan Stanley, and Goldman Sachs Group Inc.

Ashley Zandy, a spokeswoman for Facebook, and Pen Pendleton, a spokesman for Morgan Stanley, declined to comment yesterday, as did Michael DuVally, a spokesman for Goldman Sachs, and Jennifer Zuccarelli, a spokeswoman for JPMorgan.

The Wall Street Journal reported earlier yesterday that Facebook planned to reduce its credit line and extend the duration of its term.

--With assistance from Lee Spears in New York. Editors: Reed Stevenson, Tom Giles

To contact the reporter on this story: Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net



