Breakingviews - SoftBank debt burden may stoke an asset fire sale - Reuters:
Masayoshi Son’s SoftBank Group is a giant tech-investment machine whose gears are greased by generous dollops of debt. Borrowing worked well for the $80 billion company as asset values rose; it could become a problem as they go into reverse.
On Son’s preferred measures, SoftBank’s debt burden seems manageable. The Japanese billionaire wants to keep borrowing below one-quarter of the value of its assets, which include stakes in e-commerce group Alibaba, two telecom operators, chipmaker Arm and a chunk of the $100 billion Vision Fund. On that count he has a comfortable margin of safety: net debt was $45 billion at the end of June, or just 17% of his portfolio’s $260 billion worth, using market prices for the listed stakes and SoftBank’s estimates for its private holdings. Cash on hand covers at least two years of bond repayments, while cash flows were more than twice annual interest payments in the 12 months to June.
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