By Sam Nussey
TOKYO (Reuters) – SoftBank Group Corp <9984.T> said on Wednesday it plans to borrow up to 500 billion yen ($4.5 billion) from 16 domestic and foreign financial institutions using almost a third of its stake in telco SoftBank Corp <9434.T> as collateral.
The loan, which a company spokeswoman said will be used to boost the group’s cash on hand and for general business purposes, comes as SoftBank’s finances are under pressure on multiple fronts.
SoftBank is offering a 20% stake in the telco as collateral for the two-year loan with an option to extend for a further year. The shares are worth 1.4 trillion yen as of today’s market price – nearly triple the amount the group is borrowing.
Activist investor Elliott Management has amassed a holding of almost $3 billion in SoftBank, sources said, and is calling for $20 billion in stock buybacks using the group’s stake in e-commerce giant Alibaba <BABA.N>.
SoftBank founder and CEO Masayoshi Son said last week while open to potentially buying back shares he is “no hurry” to sell down the stake.
The margin loan comes as SoftBank invests its own funds in the successor to its first $100 billion Vision Fund as it struggles to attract outside investors.
Talks to secure $3 billion from Japan’s three biggest banks to fund a bailout of office sharing startup WeWork have stalled, Reuters reported in December, as the lenders hit internal lending limits.
SoftBank owns two-thirds of its domestic wireless unit, which has pledged to pay out 85% of net income as dividends, providing a steady stream of cash to fund Son’s bets on technology firms.
Third-quarter profit at the group was almost wiped out by losses at the Vision Fund, potentially further dampening investment enthusiasm for the group’s investments on untested start-ups.
(Reporting by Sam Nussey; Editing by Himani Sarkar, Muralikumar Anantharaman and Kim Coghill)