The Expected Impact on Consolidated Financial Results of SoftBank Group Corp. from Monetization of its Alibaba Stake
SoftBank Group Corp. (“SBG”) announces that it has executed a series of capital raising transactions (the “Transactions”) which involve monetizing a portion of the shares of Alibaba Group Holding Limited (“Alibaba”) held by SBG's wholly-owned subsidiary SB China Holdings Pte Ltd (“SB China”) for USD 10 billion in aggregate, as announced in the press releases listed in “1. Timely Disclosure Materials on the Transactions” below. Accordingly, SBG has recognized the expected impacts of the Transactions on its consolidated financial results as follows.
1. Timely Disclosure Materials on the Transactions
- “ SoftBank Announces a Minimum $7.9 Billion Monetization of its Alibaba Stake in Coordination with Alibaba Group ” dated June 1, 2016
- “ Notice of Pricing of Monetization and Additional Sale of Shareholding in Alibaba Group Holding Limited ” dated June 2, 2016
- “ SoftBank Group Announces Exercise of Over-Allotment Option in Offering of Securities Tied to Shares of Alibaba Group ” dated June 3, 2016
2. Expected Impacts on Consolidated Financial Results
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(1)
Sale of Alibaba ordinary shares
SB China, a wholly-owned subsidiary of SBG, has sold its Alibaba shares to each of 4 buying parties, namely 1) Alibaba, 2) members of the Alibaba Partnership acting collectively, * 3) Gamlight Pte Ltd, a wholly-owned subsidiary of GIC Private Limited, and 4) Aranda Investments Pte. Ltd., a wholly-owned subsidiary of Temasek Holdings Private Limited. As a result, SBG will record gain on sales of shares of associates in its consolidated financial statements for the fiscal year ending March 2017. The amount of the gain will be obtained based on a carrying amount of Alibaba on SBG's consolidated balance sheets at the time of the sale and therefore will be announced separately. Currently SBG expects the amount of the gain to be around JPY 200 billion to 250 billion.
The sale to members of the Alibaba Partnership acting collectively is expected to occur in mid-July 2016.
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(2)
Execution of variable forward purchase agreement related to Alibaba ordinary shares
Upon the issuance of Mandatory Exchangeable Trust Securities (“Trust Securities”) by the Mandatory Exchangeable Trust (“Trust”), West Raptor Holdings, LLC (“WRH LLC”), a wholly-owned subsidiary of SoftBank Group International GK and in turn is wholly owned by SBG, will receive net proceeds through the issuance of Trust Securities under a variable forward purchase agreement of Alibaba ordinary shares. SBG expects to recognize interest-bearing debt and derivative assets (or liabilities) related to the net proceeds of approximately USD 5.4 billion in its consolidated financial statements for the fiscal year ending March 2017. The said derivative assets or liabilities will be measured at their fair value for the period up until the exchange date of the Trust Securities (the first scheduled trading day after June 2019) and the changes in the fair value of the derivative will be recognized in profit or loss in its consolidated statements of income.
The Trust is not qualified as a subsidiary of SBG, as voting rights on operations of the Trust are held by the owners of the Trust Securities.
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