Softbank to Sell $3.2 Billion Bonds to Fund Sprint Deal

Softbank Corp., the Japanese carrier that agreed to buy a $20 billion stake in Sprint Nextel Corp., will sell 300 billion yen ($3.2 billion) in bonds to help finance the acquisition.

Softbank will offer bonds maturing in four years to Japanese individual investors this month, the Tokyo-based company said today in a finance ministry filing.

Billionaire Masayoshi Son’s mobile phone carrier offered in October to buy a 70 percent stake in Sprint Nextel to expand into the U.S. wireless market. Softbank, which boosted profit by drawing users with Apple Inc.’s smartphones and tablets, has climbed 21 percent in Tokyo trading since the Sprint deal plans were first reported.

“Softbank is well-known and popular among individuals,” said Mana Nakazora, chief credit analyst at BNP Paribas Securities Japan in Tokyo. “There isn’t concern about the bonds remaining unsold.”

Standard & Poor’s and Moody’s Investors Service have put the Japanese company’s credit ratings under review for possible downgrade on concern the acquisition may undermine its financial strength. A downgrade of one step would bring the rating to a speculative, or junk, ranking at Moody’s.

Surging Profit

Softbank doubled third-quarter net income to 65.9 billion yen as it gained customers with Apple’s smartphones and tablet computers. Sales gained 7.1 percent to 923.7 billion yen during the three months ended Dec. 31, the company said Jan. 31.

The carrier rose 4.1 percent to 3,520 yen as of 2:17 p.m. in Tokyo trading, headed for the highest close since April 2006. The stock is up 12 percent this year, compared with the 10 percent gain by the benchmark Nikkei 225 Stock Average.

The Sprint announcement came two weeks after Softbank agreed to acquire a stake in rival Japanese wireless provider eAccess Ltd. to help meet bandwidth demand from iPhone users. Sales of Apple phones and tablets have helped Softbank boost earnings more than sevenfold during the past four years.

The arrangers of the bonds include Nomura Holdings Inc., Daiwa Securities Group Inc., Mitsubishi UFJ Morgan Stanley Securities Co., Mizuho Financial Group Inc. and SMBC Nikko Securities Inc.

The bonds, whose coupon will be set on Feb. 22 at between 1.25 percent and 1.85 percent, will be offered from Feb. 25 to March 11, according to the filing.

Regulatory Review

The U.S. Department of Justice has asked the Federal Communications Commission to delay a review.

The acquisition of Overland Park, Kansas-based Sprint’s 56.4 million mobile subscribers would increase Softbank’s customer base to 96 million in the U.S. and Japan, the Japanese company said in October. The company’s biggest Japanese rival NTT DoCoMo Inc. has about 60.8 million subscriptions.

Softbank is getting a bridge loan of as much as 1.65 trillion yen from banks to finance the Sprint purchase, it said last year.

The mobile-phone operator has more than 188 billion yen of bonds maturing this year, including a 130 billion yen bond due Sept. 17, according to data compiled by Bloomberg.

(Corrects to remove erroneous reference to reason for review in 11th paragraph of story published Feb. 6.)
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