Softbank to release $4bn in bonds to fund Sprint deal

Softbank to release $4bn in bonds to fund Sprint deal

Summary: In order to fund the purchase of a large stake in Sprint, Softbank wants to raise additional funds through bond sales.

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TOPICS: Mobility, Legal
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Japanese wireless carrier Softbank intends to help fund the acquisition of a 70 percent stake in Sprint by releasing bonds to investors.

According to Bloomberg, Softbank will release bonds worth 370 billion yen ($4 billion) based on 1.47 percent four-year notes, which will go on sale to investing parties on February 25 through until March 11 this year.

Earlier this month, bond sales were pegged at $3.2 billion.

The Japanese firm intends to secure and finalize a $20.1 billion stake in Sprint, which would swell its customer base to 96 million subscribers in both the United States and Japan -- far outweighing the Japanese carrier's closest rival, NTT DoCoMo, who caters for approximately 60 million users. In addition, this acquisition would mean that Softbank has the means to enter the lucrative U.S. market and become the world's third-largest carrier.

The deal is yet to be approved by the Federal trade Commission (FTC), which holds the power to approve or prevent the acquisition.

Hiroaki Hayashi, an investment manager, told the publication that the bond offering is a "typical" method to secure additional funding, and there "is likely to be a considerable demand for the notes." However, investment services firms Standard & Poor’s and Moody’s have placed Softbank credit ratings on review due to concerns about the company's resultant financial strength if the Sprint acquisition goes through.

If the Softbank-Sprint deal is completed, then Sprint hopes to acquire additional shares in rival firm Clearwire, which has valuable customers and spectrum resources that could help the struggling carrier dtay afloat. Sprint would recieve an $8 billion cash injection from then-majority shareholder Softbank, which has capped the company's Clearwire bid at $2.97 a share. 

However, Dish Networks also has its eye on Clearwire, and has upped the bidding war with a price tag of $3.30 a share. In addition, the FCC has been asked to delay the Softbank-Sprint review due to concerns over Softbank's connections to Chinese equipment suppliers. 

Topics: Mobility, Legal

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  • Possible increase for purpose of increasing Clearwire bid?

    This story really caught my interest. I recalled just a couple of weeks ago Softbank had mentioned a lower amount for the bond issue, 3.2 billion. Another 800 million would help to satisfy the non Sprint shareholders in Clearwire.
    Jim Alvrus