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They turned $3 billion, WeWork funding talks stall by Japan’s banks: sources

TOKYO (Reuters) – SoftBank Group Corp’s talks to secure $3 billion from Japan’s three biggest banks have put into it as this will have affected the internal lending limits of the company, two of the people said, ‘ it is complicated by a $9.5 billion rescue package for WeWork.

FILE PHOTO: The logo of SoftBank Group, Corp, is displayed at the SoftBank World in 2017 conference to be held in Tokyo, Japan, on July 20, 2017. (REUTERS photo/Issei Kato/File Photo

The Japanese technology conglomerate’s now likely to bring in the new year without any of the WeWork funding in place, all the people said, adding the bank is also concerned about the risks that are involved in the rescue of the U.S. office sharing startup.

Mizuho Financial Group Inc. Mitsubishi UFJ Financial Group Inc (MUFG) and Sumitomo Mitsui Financial Group Inc (SMFG), are looking for ways to get funding as it is offset by the exposure to light, the people said, refusing to be identified because the information is not open to the public.

SoftBank did not respond to a request for comment. Mizuho, MUFG and SMFG declined to comment.

One option is to make use of some of the SoftBank has a 26% stake in the Chinese e-commerce major Alibaba Group Holding Ltd. as collateral, the people said.

“SoftBank is a major customer, and we want to do everything we can to help, but we also have to our credit,” said a senior banker.

The interviews illustrate the difficulty, they turned to the japanese banks. Founder, Masayoshi Son, the tech juggernaut has long been a lucrative source of business lending in the world’s third-largest economy, where the banks usually have to borrow at ultra-low interest rates, which, in years of deflation.

But they turned to the growing public debt, and, as a result of the great efforts WeWork earlier this year, the focus is on the company’s higher risk profile.

“The banks can’t loosen their credit criteria, it is only for SoftBank,” said S&P’s Global credit Ratings senior director Ryoji Yoshizawa.

The other option is to reduce the risk of spreading, it is a syndicated bank loan, Yoshizawa said, adding this will be time-consuming, potentially delaying the financing.

THE DEBT PILE

SoftBank in October, it said that it would launch a $9.5 billion bailout from the WeWork after the termination of the startup of the initial public offering by the investors care about corporate governance, and is a co-founder, Adam Neumann’s hard-partying ways.

The son said that he turned a blind eye to the Stand of the management is, however, that the company is a solid company.

The domestic banking impasse has led SoftBank to secure a $1.75 billion credit facility from the Goldman Sachs Group, Inc., for the people on a regular basis.

Goldman Sachs declined to comment.

FILE PHOTO: A WeWork’s logo is seen at a WeWork office in San Francisco, California, USA, September 30, 2019. REUTERS/Kate Munsch

They turned a 5.5 trillion yen ($50.28 billion) on the outstanding bonds, and 4 trillion yen in bank loans, Refinitiv of the data turned out to be. The weighted average cost of debt of 3.7%, the seventh highest among all of the companies in the Nikkei 225 Stock Average.

Moody’s, the calculations showed that the combinations of the interest coverage ratio is 1.3, meaning the group’s income is more than enough to keep her in debt, with some left over.

($1 = 109.3900 of yen)

Reporting by Takashi Umekawa, Sam Nussey, and Takaya Yamaguchi; Editing by David Dolan and Christopher Cushing

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