Re:SoftBank’s debt obsession
by polskibus on Tuesday November 06, 2018 @02:08PM
(#18393985)
I wonder how are the downside-protecting elements and that unusual debt based financing structure affecting Uber and other large companies that SoftBank invests in. Is it possible that Uber collapses because of the 7% yearly coupon that SoftBank fund must produce ?
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| on HN ]
There is no risk of SoftBank's financial situation causing a collapse at one of the companies in which they hold a minority stake. The worst that could happen is they don't fund Uber the next time they need funding.
There's no chance that a collapse is immediately caused but if SOFTBK reaches a point where they closed off from capital markets, one of their best ways to raise cash is to sell their stakes in some company. I don't think it could happen with Uber just given the ownership breakdown but it could absolutely happen with another one of their stakes.
That would depend on the term sheet, wouldn't it? 7% guaranteed yearly return may require unusual conditions on the investment side.
Sure, that's possible but then you're just dealing with relatively blind speculation. I would assume there's no issues on the investment side unless there's strong reason to believe there is.
The article offers one reason to wonder:
> [...] its term sheets — from what I hear — are heavily laden with economic terms that give SoftBank huge downside protection.
How much weight you want to give that, well.