SoftBank Group Corp. on Monday unveiled a plan to selling or monetize up to 4.5 trillion yen ($41 billion) in assets to buy back 2 trillion yen of its shares and reduce debt.
The company's Board of Directors has approved the sale or monetization of up to JPY4.5 trillion (USD 41 billion) of assets held by SBG and authorized the repurchase of up to JPY 2 trillion (USD 18 billion) of SBG common stock with the balance to be used for debt redemptions, bond buybacks and increase cash reserves.
Billionaire Masayoshi Son’s investment giant said it’s authorized the sale or monetization over the next four quarters of unspecified assets, which include major holdings in corporations from China’s Alibaba Group Holding Ltd. to sharing-economy stalwarts such as Uber Technologies Inc. and WeWork.
The asset sales come during a growing financial squeeze on SoftBank and its $100 billion Vision Fund, which has recorded two consecutive quarters of losses as its tech bets fall short, with global economic growth sputtering due to the coronavirus pandemic.
The transactions will be executed over the next four quarters, the company said. The newly authorized program is in addition to the JPY 500 billion share repurchase program SBG announced on March 13, 2020.
Currently, SBG has more than JPY 27 trillion (USD 245 billion) of assets and JPY 1.7 trillion (USD 15 billion) of cash on its balance sheet.
“This program will be the largest share buyback and will result in the largest increase in cash balance in the history of SBG, reflecting the firm and unwavering confidence we have in our business,” said Masayoshi Son, Chairman and Chief Executive Officer of SBG. “This will allow us to strengthen our balance sheet while significantly reducing debt. Moreover, the monetization of assets represents less than 20 percent of the Company’s current asset value.”
SBG believes its shares are substantially undervalued and as of the end of last week traded at a 73 percent discount to their intrinsic value, the largest discount in the company’s history. The two buybacks – this and the previously announced buyback on March 13 – would result in the company repurchasing and retiring 45 percent of SBG’s stock. The company has been taking steps to unlock the significant value of the assets currently held by SBG, including asset dispositions, the spinoff of SoftBank Corp., the merger of Sprint and T-Mobile, the JPY 600 billion (USD 5.5 billion) share repurchase (announced in February 2019) and the JPY 500 billion (USD 4.5 billion) share repurchase program announced in March 2020.
SBG believes the enhanced share repurchase program and significant debt reductions, including bond buybacks, will further strengthen its balance sheet and enhance its credit rating.