TOKYO: SoftBank Group Corp’s talks to secure $3 billion from Japan’s three biggest banks have stalled as the lenders have hit internal lending limits to the firm, two people said, complicating a $9.5 billion rescue package for WeWork.
The Japanese technology conglomerate is now likely to enter the new year without the WeWork financing in place, the people said, adding the banks are 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 seeking ways to provide the financing while offsetting exposure, the people said, declining to be identified because the information is not public. SoftBank did not respond to a request for comment. Mizuho, MUFG and SMFG declined to comment.
One option is to use some of SoftBank’s 26 percent stake in Chinese e-commerce major Alibaba Group Holding Ltd. as collateral, the people said.
“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.
FASTFACTS
• The Japanese technology conglomerate is now likely to enter the new year without the WeWork financing in place.
• The banks are also concerned about the risks involved in rescuing the US office-sharing startup. •SoftBank has 5.5 trillion yen in outstanding bonds and another 4 trillion yen in bank loans, Refinitiv data shows.
The talks illustrate the difficulty SoftBank poses for Japan’s banks. Founder Masayoshi Son’s tech juggernaut has long been a lucrative source of corporate lending in the world’s third-largest economy, where banks typically have to lend at ultra-low interest rates given years of deflation.
But SoftBank’s growing debt and turmoil at major bet WeWork earlier this year also highlight the firm’s higher risk profile.
“Banks cannot loosen their credit criteria only for SoftBank,” said S&P Global Ratings senior director Ryoji Yoshizawa.
Another option to spread the risk is a syndicated loan, Yoshizawa said, adding this would be time-consuming — potentially delaying financing.
SoftBank in October said it would launch a $9.5 billion bailout of WeWork after the cancelation of the startup’s initial public offering due to investor concerns over its corporate governance and co-founder Adam Neumann’s hard-partying ways.
