SoftBank Group announced this Monday it is going to sell up to $41 billion in assets to finance a stock buyback, reduce debts and increase its cash reserves.
It is important to state, that the company’s share values have halved over the past month and that it already carries a heavy $55 billion in debt.
The amount of stock buyback is announced to be $18 billion worth, the remaining amount of money is to be used on debt, bond buybacks and cash reserves, setting a four-quarter timetable for the transactions.
This news of the massive buyback sent SoftBank stock limit-up to more than 18 percent in the last hour of trade in Tokyo.
“This program will be the largest share buyback and will result in the largest increase in cash balance in the history of SBG, reflecting the firm and unwavering confidence we have in our business,” the firm’s chairman Masayoshi Son said in a statement.
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“This will allow us to strengthen our balance sheet while significantly reducing debt,” he added, saying the assets being sold account for “less than 20 percent of the company’s current asset value”.
SoftBank has seen its stock go downhill in recent weeks. The worries about the liquidity of Softbank were amplified with the fact that it is heavily indebted and global financial markets are consumed by fears about the economic consequences of the Covid-19 pandemic.
The specific assets on sale over the next 12 months have not been yet named, but analysts are drawing people’s attention to its $140 billion stake in Chinese Big Tech Alibaba, according to the Financial Times.
The latest news so far are that SoftBank Group announced it will appoint new independent board members to improve its governance.
Sources: https://www.fintechfutures.com/2020/03/softbank-to-sell-41bn-in-assets-to-firm-up-financials-amid-virus-outbreak/ https://www.arabnews.com/node/1645666/business-economy https://news.yahoo.com/softbank-sell-41-bn-assets-buy-shares-lower-070849696–finance.html