SoftBank's WeWork bailout stalls
Conglomerate has failed to secure lending from Japan's three biggest banks
SoftBank’s $9.5bn (£7.3bn, €8.5bn) bailout of WeWork has stalled because the Japanese technology conglomerate’s plan to secure $3bn from Japan’s three biggest banks has failed.
Lenders have hit internal lending limits to the firm, two people close to the matter have said.
SoftBank is now likely to enter the new year without the WeWork financing in place, with the banks also concerned about the risks involved in rescuing the US office-sharing startup.
Mizuho Financial Group Inc, Mitsubishi UFJ Financial Group Inc (MUFG) and Sumitomo Mitsui Financial Group Inc (SMFG) are still seeking ways to provide the financing. One option could be to use some of SoftBank’s 26 per cent stake in Chinese e-commerce giant Alibaba as collateral.
“SoftBank is an important client so we want to do everything we can to help, but we have to consider our credit risk,” said a senior banker.
If the trio of banks lend the full $3bn to SoftBank, insiders say that their total loans to the firm and its $100bn Vision Fund would exceed $15bn.
In October, SoftBank said it would launch a $9.5bn bailout of WeWork after the cancellation of the startup’s initial public offering. This was due to investor concerns over corporate governance and the behaviour of co-founder Adam Neumann.
SoftBank has 5.5 trn yen ($50.28bn in outstanding bonds and another 4 trn yen in bank loans, Refinitiv data showed. Its weighted average cost of debt is 3.7 per cent, the seventh-highest among all companies on the Nikkei 225 Stock Average.