SoftBank starts $21 billion sale of T-Mobile shares

SoftBank Group Corp unveiled a series of transactions on Monday to divest more than 21 billion U.S. dollars worth of stock in U.S. wireless carrier T-Mobile U.S. Inc, as it seeks funding for a 41 billion U.S. dollars share buyback and debt reduction plan.

SoftBank's shares have more than doubled since the middle of March, despite the economic uncertainty fueled by the COVID-19 pandemic, as CEO Masayoshi Son moves to shed or trim its stakes in other companies such as Alibaba Group Holding.

While the divestments have bankrolled a string of share buybacks, delighting investors including hedge fund Elliott Management Corp, they have raised concerns among credit ratings agencies about the Japanese conglomerate's financial standing.

They come after several of SoftBank's investments, including the ones in office space-sharing start-up WeWork and payment processor Wirecard AG, soured, and it suspended efforts to raise a successor to its 100 billion U.S. dollars Vision Fund.

Many of the T-Mobile shares divested by SoftBank were acquired by T-Mobile itself, which will in turn sell them in the open market and to private investors. SoftBank Chief Operating Officer Marcelo Claure will acquire more than 500 million U.S. dollars of T-Mobile stock, according to regulatory filings.

All in all, SoftBank will divest two-thirds of its 24.6 percent stake in T-Mobile. It also granted Deutsche Telekom AG, owner of a 43.6 percent stake in T-Mobile, call options to acquire its remaining T-Mobile shares. The call options expire in 2024.

SoftBank will pay T-Mobile a 300 million U.S. dollars fee for facilitating the transactions.

Goldman Sachs, Morgan Stanley, Citigroup and J.P. Morgan have been appointed as joint lead book-running managers for the offering. Barclays is serving as lead dealer manager and Deutsche Bank Securities is serving as joint dealer-manager.

PJT Partners is acting as financial advisor to the independent committee of the board of directors of T-Mobile, while the Raine Group LLC has acted as financial adviser to SoftBank.

(Cover image: A T-Mobile store is pictured in the Manhattan borough of New York, U.S., May 20, 2019. /Reuters)

Source(s): Reuters