SoftBank Group is planning to borrow up to 500 billion yen or $4.5 billion from 16 domestic and foreign financial institutions using almost a third of its stake in mobile operator SoftBank Corp as collateral.
The loan said will be used to boost the group’s cash on hand and for general business purposes.
SoftBank is offering 20 percent 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 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.
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 percent of net income as dividends, providing a steady stream of cash to fund Son’s bets on technology firms.