SoftBank Corp. (9984) plans to sign a loan agreement for as much as 1.98 trillion yen ($20 billion) with 19 banks tomorrow to help refinance debt from its purchase of Sprint Corp. (S:US), according to a Tokyo Stock Exchange statement.
The financing will help Japan’s third-largest mobile carrier to cut borrowing costs, three people familiar with the matter said. SoftBank will pay a margin of about 110 basis points more than the one-month Tokyo interbank offered rate on a five-year portion of the debt and about 140 basis points more for a seven-year part, the people said, asking not to be identified because the details are private. The company paid an average 5.14 percent for long-term debt in the fiscal year ended March 2011.
Sprint, the third-largest U.S. wireless company, sold a controlling stake to Tokyo-based SoftBank in July for $21.6 billion. Reducing borrowing costs may help ease investor concerns that the debt burden from the acquisition will undermine SoftBank’s finances. Both Moody’s Investors Service and Standard & Poor’s cut the company’s rating to non-investment grade in July, citing the Sprint purchase.
SoftBank rose 0.8 percent to 6,670 yen in Tokyo. The stock has more than doubled this year.
The company posted a profit in July that beat analyst estimates after using Apple Inc.’s iPhone and acquisitions to lure subscribers. Net income rose to 238 billion yen in the three months ended June from 106 billion yen a year earlier, the company said in a statement at the time.
Billionaire President Masayoshi Son is forecasting record domestic earnings this year as he accelerates the addition of new subscribers and the Sprint deal saves $2 billion annually by pooling purchases of handsets and network equipment.
SoftBank’s loan will be arranged by lenders including Mizuho Bank Ltd., Sumitomo Mitsui Banking Corp. and Bank of Tokyo-Mitsubishi UFJ Ltd., the company said in today’s filing.
Japan Bank for International Cooperation, Development Bank of Japan and Deutsche Bank AG will also contribute, the people familiar with the matter said today.
Proceeds will be used to help pay for the Sprint acquisition, refinance maturing debt and to repay some existing debts at eAccess Ltd., a local competitor SoftBank gained control of in January, SoftBank said today.
Part of the facility will include a 300 billion-yen borrowing from JBIC and Development Bank of Japan, and the other banks plan to market the debt in syndication to regional lenders from October, the people familiar said. Spokesmen at JBIC and Development Bank of Japan declined to comment.
Son, Japan’s second-richest man according to the Bloomberg Billionaires Index, said in October he targeted Sprint because it can challenge Verizon Wireless and AT&T Inc.’s dominance of the U.S. mobile-phone industry.
SoftBank acquired a 78 percent stake in Sprint after it won a bidding war with Dish Network Corp. (DISH:US) by raising its takeover bid, prompting Dish to abandon its competing proposal. The company now owns 80 percent of the Overland Park, Kansas-based carrier, according to data compiled by Bloomberg (S:US).
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