SoftBank announced plans to borrow up to JPY500 billion (US$4.5 billion) over two years from 16 domestic and overseas institutions, putting up a 20 per cent stake in its mobile subsidiary as collateral for the loan.
In a statement, SoftBank said it offered around a third of its 66 per cent stake (the equivalent of around 953 million shares) in its Japanese mobile subsidiary SoftBank Corp against the margin loan.
The shares pledged are worth around JPY1.4 trillion as at 19 February market price, almost triple the amount of what it is borrowing.
While the loan has been positioned as a means to improve its cash position, the move comes after the Japanese conglomerate drew fire from Elliott Management earlier this month, as it emerged the US activist investor had amassed a 3 per cent stake in the company.
SoftBank also recently unveiled plans for a second Vision Fund, which could put a strain on finances as it plans to invest its own capital, due to reported struggles in attracting external investors.
Indeed, the first Vision Fund has not performed as well as the company hoped.
SoftBank recorded a large drop in operating profit at group level in its fiscal Q3, as the Vision Fund slipped to a loss.
Its mobile unit performed well, though, with revenue increases across all business units during the same period.-Mobile World Live