Softbank To Procure About Y1.40 Trillion Term Loans -Source

TOKYO -(Dow Jones)- Softbank Corp. plans to procure around Y1.4 trillion (US$12.07 billion) in term loans in the coming months, which will refinance a Y1.280 trillion bridge loan it procured for its April acquisition of the Japanese unit of Vodafone Group, a person familiar with the transaction said Friday.

The Japanese Internet and telecommunications company will likely take several tranches of term loans, backed by cash flows from the newly acquired mobile phone unit, said the source, who declined to be named.

Softbank took the one-year bridge loan in April from a syndicate of Japanese and overseas financial institutions, including Deutsche Bank and Mizuho Corporate Bank.

Masayoshi Son, the company's president, has said the company plans to shift to term loans.

The new term loans will likely comprise various durations, like five-year and seven-year maturities, as well as various types of risk-based tranches, including senior-, subordinated- and mezzanine debts, the person said.

Because of steady cash flows expected from the mobile phone operations, the senior-debt tranche of the term loans will likely obtain an investment-grade debt rating.

Softbank itself has a double-B-minus rating from Standard & Poor's and a Ba3 rating from Moody's Investors Service, both of which are sub-investment or speculative grades.

A spokesman at Softbank declined to discuss details of the upcoming refinance.

"We are currently considering (details of) the refinancing. Once the details are decided, we will announce," the spokesman said.

The original Y1.280 trillion bridge loan Softbank took was the biggest-ever leveraged buyout financing deal in Japan.

An LBO is a takeover of a company using borrowed funds, with the acquired company's assets serving as collateral for the buyer's loans. The buyer then uses the cash flow of the acquired company to repay its debts.

-By Natsuo Nishio, Dow Jones Newswires; 813-5255-2929;natsuo.nishio@dowjones.com

-Edited by Tomoko Hosaka

(END) Dow Jones Newswires"

Posted to the site on 21st July 2006