SoftBank’s capital pressure increases, proposed $4.5 billion in loans from 16 financial institutions

Beijing time on the afternoon of February 19th, according tomedia reports, SoftBank Group announced today that it plans to lend 500 billion yen ($4.5 billion) to 16 domestic and foreign financial institutions. SoftBank said it would use part of its stake in SoftBank Corp, its telecoms company, as collateral for the loan. According to a SoftBank spokesman, the loan will be used to boost the company’s cash on hand and for general business purposes.

SoftBank's capital pressure increases, proposed $4.5 billion in loans from 16 financial institutions

It is clear that SoftBank’s current financial position is under pressure in many ways. Elliott Management, a activist investor, is pushing for reforms at SoftBank, including by urging it to buy back $20bn of shares, according to people familiar with the matter. Elliott Management currently owns a stake in SoftBank worth nearly $3 billion.

In addition, SoftBank has had to invest itself because of difficulties in financing the Vision Fund Phase 2. People familiar with the matter said recently that major investors would refuse to participate in Vision Fund Phase 2 unless the Vision Fund was able to reverse its performance.

Last week, Masayoshi Son, SoftBank’s chief executive, acknowledged that Vision Fund 2 had faced financing challenges, but said he would use SoftBank’s money to advance his investment strategy.

Separately, there were reports in December that talks on SoftBank’s $3bn WeWork rescue fund from Japan’s three biggest banks had stalled because they had capped their internal lending to SoftBank, complicating softbank’s $9.5bn rescue plan for WeWork. (Li Ming)