SoftBank sees ¥700 billion loss from WeWork investment

It is part of a bigger ¥1 trillion pool of non-operating losses that SoftBank experienced from investments held outside of its Vision Fund.
Written by Campbell Kwan, Contributor

SoftBank has announced in a revised forecast that it expects to see a loss of around ¥700 billion solely from its investment in WeWork for the fiscal year ended March 2020.

While SoftBank expected losses from its investment in WeWork, the loss amount was revised to ¥700 billion to reflect new losses from loan commitments and financial guarantees made to the shared office space company, SoftBank said.

The ¥700 billion loss from WeWork forms part of a bigger ¥1 trillion pool of non-operating losses that SoftBank experienced throughout the fiscal year from investments held outside of its Vision Fund. 

"These non-operating losses were previously expected to total approximately ¥800 billion, however they are currently expected to total more than ¥1 trillion," SoftBank said. 

Due to this revision, the company expects its income before tax compared to previous forecasts to shift from ¥250 billion to ¥20 billion -- a 92% drop in forecast income before taxation.

Despite this large drop in expected income, SoftBank maintained its forecast from earlier this month that it accrued ¥6.15 trillion in annual net sales and had an annual operating loss of ¥1.35 trillion for the fiscal year ended March 2020. 

Beyond the losses, SoftBank is currently being sued by WeWork for its decision to back out of a $3 billion tender offer that was agreed upon in October last year.

According to Softbank, the tender offer was withdrawn as WeWork had failed to meet "certain conditions" of the agreement. The unfulfilled conditions were a failure to secure necessary antitrust approvals by an April 1 deadline and a failure to close and wrap up joint ventures in Asia, the Japanese tech conglomerate said.  

Previously, the SoftBank Vision Fund in Q3 reported operating losses of ¥225 billion, which almost completely wiped out the Japanese company's bottom line.

More recently, SoftBank founder and CEO Masayoshi Son said he expected 15 companies in the Vision Fund to go bankrupt as the company tightens its financial belt in the midst of the novel COVID-19 outbreak

SoftBank also recently announced a $41 billion share buyback scheme that involves the sale of assets to shore up share prices and reduce debt. A $4.8 billion buyback scheme, separate from the latest program, is also in motion. 

The Japanese tech conglomerate's earnings results briefing will be released early next month.


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