Softbank: To Reach Agreement To Roll Over Vodafone Loans
TOKYO -(Dow Jones)- Japan's Softbank Corp. said Tuesday that it expects to reach an agreement with financial institutions soon on rolling over loans it used to finance the acquisition of Vodafone KK.
Softbank is considering refinancing the Y1.280 trillion bridge loan it took out in April to fund its purchase of UK mobile phone operator Vodafone Group's struggling Japanese unit by the end of September to lessen its interest burden.
This move to long-term loans may help alleviate lingering concerns among Softbank investors about the company's weak financial standing.
On the Tokyo Stock Exchange, Softbank shares were up 4.3% at Y2,200 midday.
"We are in the final stage of negotiations (with financial institutions) to roll over to long-term loans," Softbank said in a statement. "We expect a basic accord soon," it said.
But a Softbank spokesman declined to comment on any specific details.
The Nihon Keizai Shimbun said Tuesday that Softbank has solidified plans to raise Y1.45 trillion through the securitization of its Vodafone KK operations.
Under the securitization scheme, Softbank would use the cash flow generated by Vodafone, its cell phone service provider to be renamed Softbank Mobile Corp. on Oct. 1, for its interest and principal payments.
Earnings at Softbank's cellular phone segment are much more stable than those generated by its other operations. Therefore, the bonds issued through the securitization of the cell phone business would be deemed more creditworthy than its overall enterprise, Nikkei said.
This would then enable Softbank to raise the funding at a rate that is around one percentage point lower than a bank loan, the paper said.
Softbank's one-year bridge loan in April came from a syndicate of Japanese and overseas financial institutions, including Deutsche Bank and Mizuho Corporate Bank.
-By Hiroyuki Kachi, Dow Jones Newswires, 813-5255-2929, hiroyuki.kachi@dowjones.com
-Edited by Mayuko Ota
(END) Dow Jones Newswires"
Posted to the site on 26th September 2006
