After years of acquisitions saddled SoftBank Group Corp. with record debt and left it undervalued, founder Masayoshi Son is getting serious about improving the company s balance sheet.SoftBank has announced a series of asset sales as part of a broader effort to reexamine its technology portfolio, reduce its massive debt load and gain flexibility for future investments.
The Japanese company plans to raise $10 billion from selling down its stake in China s Alibaba Group Holding Ltd. and another 73 billion yen $685 million from offloading shares in GungHo Online Entertainment Inc. And it s in discussions to exit Finnish game developer Supercell Oy, according to people familiar with the matter, a deal that could increase the total raised via asset sales to $14 billion.Son built his corporate empire by borrowing heavily to finance acquisitions, transforming a humble computer software distributor into a global technology giant.
SoftBank last week said it is selling shares in Alibaba, the Chinese e-commerce company that pulled off the world s largest initial public offering in 2014, for the first time since first buying in about 16 years ago.
The Japanese company s total debt has soared 5.6 times in the past four years following its acquisition of Sprint, which has suffered seven straight years of losses and has $10 billion of liabilities coming due in the next three years.Moody s Investors Service and Standard & Poor s both rate SoftBank s debt at one level below investment grade.
Moody s said its rating won t be affected by the Alibaba share sale and that the company will need to cut its debt further to be considered for an upgrade.
While SoftBank s 2020 dollar bonds rallied Friday to a three-year high and its bond risk has more than halved in the past four months, it still has about a 0.4 percent chance of non-payment in the coming year, based on the Bloomberg Default-Risk Model, which considers factors such as share prices and debt.SoftBank had said the Alibaba transaction will reduce its ratio of net debt to earnings before interest, taxes, depreciation and amortization to 3.3 times, from 3.8 at the end of March.