#SoftBank's plans for second mega #VisionFund hit by #WeWork, #Uber debacles

SoftBank's cash flow problems compound plans for second mega-fund hit by WeWork, Uber debacles

(Reuters) - SoftBank Group founder and CEO Masayoshi Son is struggling to raise money for a second massive technology investment fund in the wake of the failed public offering of office-rental company WeWork and sliding valuations of other major investments, according to two people familiar with the situation.

Son is still determined to go ahead with Vision Fund 2 even though some lieutenants have urged a delay... 

The worsening turmoil at WeWork will continue to be a strain on SoftBank and the first [Vision] fund. 

The price of WeWork bonds has sunk...without further investment from Son or his entities, it will be difficult to stabilize given the size of its future financial commitments.

That is just one of the calls on SoftBank's money. Some of the investors in the first Vision Fund receive interest payments of 7% annually on their stakes, an unusual structure that creates an ongoing need for cash. Some of that has come from sale of stakes...but SoftBank has also borrowed money to fund payouts to investors.

SoftBank also faces the risk that a deal to merge its money-losing U.S. telecom carrier Sprint Corp with T-Mobile US Inc could be blocked by an antitrust lawsuit from U.S. states. If that happens, it will leave SoftBank with an expensive liability, analysts say.

SoftBank's stock has fallen 13% over the past month and is now trading at its lowest level since January. SoftBank's operating cash flow also turned negative last quarter and it could struggle to raise tens of billions of dollars in cash, a Reuters analysis of its balance sheet shows.

SoftBank does not have significant cash on hand to finance the new fund. As of June 30, it had $27.41 billion of cash and cash equivalents on its balance sheet. However, this and other current assets was more than matched by near-term liabilities.

Read the whole article online here: https://premium.kitco.com/news/2019-10-04/SoftBank-s-plans-for-second-mega-fund-hit-by-WeWork-debacle.html

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