Softbank to sell $3.2bn in bonds to fund Sprint deal

Japanese carrier Softbank is reportedly going to sell shares to investors in order to raise funding for the upcoming purchase of a Sprint Nextel stake.
Written by Charlie Osborne, Contributing Writer

Reports suggest that Japanese carrier Softbank is planning to sell up to $3.2 billion in bonds to help fund the acquisition of a large stake in Sprint.

According to Bloomberg, Softbank -- who acquired a 70 percent stake in Sprint last October for $20.1 billion -- will sell up to 300 billion yen ($3.2 billion) worth of bonds to try and finance the deal, which is yet to be approved by the Federal trade Commission (FTC) who is due to review the deal.

Japanese investors will be offered four-year maturation bonds this month, according to a finance ministry filing. The filing states that the bond coupons will be set at between 1.25 and 1.85 percent, and will be offering from 25 February to 11 March.

With Softbank's resulting $8 billion cash injection, Sprint hopes to acquire remaining shares in broadband provider Clearwire in order to claim additional spectrum and a larger customer base. However, the new majority shareholder Softbank capped the bid at $2.97 a share.

This is where things get interesting. Sprint is capped at $2.97 a share, and then rival firm Dish Network swoops in, offering Clearwire $3.30 a share. Sprint isn't likely to give up without a battle, especially as the carrier already owns over 50 percent of the firm -- and although Clearwire said it would consider the offer, it also said it was "severely limited by its current contractual arrangements."

The U.S. Department of Justice has asked the FCC to delay a review of the potential deal due to Softbank's links to Chinese suppliers of equipment, however, it is not just governmental bodies who are getting themselves involved. In addition, Dish Network has asked the FCC to hold off -- simply because if Softbank's 70 percent Sprint stake goes through, then Sprint will not be able to acquire the rest of Clearwire shares, which leaves Dish to scoop them up without a battle.

Whether Dish Network's out-of-the-blue bid or Sprint's, which relies on Softbank's acquisition, is accepted -- the fact is that Clearwire is struggling and needs additional financing to keep the firm afloat. Currently trading at $3.24 per share, Reuters believes that the company has enough funds to hold out until the third quarter of this year. 

The potential acquisition of Sprint would result in swelling Softbank's customer base to 96 million subscribers in the United States and Japan. The firm's largest local rival, NTT DoCoMo, has roughly 60 million subscribers.

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