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Softbank Gets 1.65 Trillion Yen Loan to Fund Sprint Acquisition

Softbank Corp. (9984), the Japanese carrier buying 70 percent of Sprint Nextel Corp. (S) for about $20 billion, said its board approved a bridge loan of as much as 1.65 trillion yen ($19.7 billion) to finance the deal.

The nation’s third-largest mobile-phone company said it would use the loan proceeds to invest about $20.1 billion in Sprint, as detailed in its Oct. 15 announcement, and plans to refinance the facility with mid- and long-term debt, according to a statement to the Tokyo Stock Exchange.

Japan’s three megabanks, Mizuho Corporate Bank Ltd., Sumitomo Mitsui Banking Corp. and Bank of Tokyo-Mitsubishi UFJ Ltd., are the loan’s mandated lead arrangers, along with Deutsche Bank AG, according to today’s statement. The loan will be split into two parts, facility A of 250 billion yen and facility B of 1.4 trillion yen.

Softbank is closing the gap on its bigger rivals NTT DoCoMo Inc. (9437) and KDDI Corp. (9433) by cutting fees and adding more lucrative smartphone subscribers, thanks in part to its being the first mobile carrier in Japan to offer the iPhone series. It’s also seeking to increase users outside the country, and its purchase of Sprint, based in Overland Park, Kansas, would bring customer numbers to about 96 million in Japan and the U.S.

Shares in Softbank closed 1.95 percent higher at 2,987 yen. The stock has gained 31.8 percent this year, versus a 10.9 percent advance for the broader Topix index.

Facility A of the loan will be drawn down on Dec. 21 and facility B at the time of the Sprint acquisition, according to the statement. Proceeds from the smaller facility will be used to finance the investment in Sprint in the form of newly-issued convertible bonds, while the 1.4 trillion yen portion will be used for the investment in and resulting acquisition of Sprint. Both parts will mature on Dec. 17, 2013.

Softbank said it expects to record about 17 billion yen in costs associated with the loan as non-operating expenses in its income statement for the fiscal year ending March 31.

To contact the reporters on this story: Katrina Nicholas in Singapore at knicholas2@bloomberg.net; Marco Lui in Tokyo at mlui11@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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