SoftBank Group stated Wednesday it plans to borrow up to 500 billion yen ($4.5 billion) from 16 domestic and international financial establishments using almost a third of its stake in telco SoftBank as collateral.
The loan, which a company spokesperson stated shall be used to boost the group’s cash in hand and for basic business purposes, comes as SoftBank’s funds are under stress on multiple fronts.
SoftBank is providing a 20% holdings in the telco as security for the two-year mortgage with an option to extend for an additional year. The shares are valued at 1.4 trillion yen as of today’s market worth – almost triple the amount the company is borrowing.
Activist investor Elliott Management has acquired a holding of nearly $3 billion in SoftBank, sources stated and is demanding $20 billion in stock buybacks utilizing the group’s stake in e-commerce titan Alibaba.
SoftBank CEO Masayoshi Son stated last week while open to possibly buying back shares he has “no hurry” to sell down the stake.
The margin mortgage comes as SoftBank invests its funds in the successor to its $100 billion Vision Fund as it strives to lure outside traders.
Negotiations to earn $3 billion from Japan’s three biggest banks to fund a bailout of office-sharing startup WeWork have delayed.
SoftBank owns two-thirds of its domestic wireless subsidiary, which has committed to payout 85% of net revenue as dividends, offering a steady stream of cash to fund Son’s bets on technology companies.