17th Nov 2006 13:56
Softbank Corp17 November 2006 17 November 2006 Resolution made at the board of directors meeting regarding refinancing ofmobile communications business SOFTBANK CORP. ("SOFTBANK") announces that for refinancing with a purpose toextend the term of borrowings based on the bridge facility totaled to JPY1.28trillion for the acquisition of Vodafone K.K. (current SOFTBANK MOBILE Corp.,head office: Minato-ku, Tokyo; Representative: Masayoshi Son; "SBM") concludedin April 2006, the proposal of the various transactions to be carried out byMobiletech Corporation (head office: Minato-ku, Tokyo; Representative: JunichiMiyakawa; "Mobiletech"), SOFTBANK's wholly-owned subsidiary, BB Mobile Corp.(head office: Minato-ku Tokyo; Representative: Masayoshi Son; "BBM") and SBM(including its wholly-owned subsidiaries) was approved at the board of directorsmeeting held today. I Summary of the main transactions for approval 1 Borrowings by SBM totaled to JPY1.45 trillion*1 2 Repayment of the borrowings (JPY1,173.8 billion) based on Bridge Facility Agreement contracted by BBM (totaled to JPY1.28 trillion) 3 Modification of the terms of class 1 preferred stock already issued by BBM 4 Determination of terms of class 2 preferred stock to be issued by BBM (classified stocks with veto rights) 5 Establishment of security interests over the assets of Mobiletech, BBM, SBM and SBM's wholly-owned subsidiaries (4 companies in total) 6 Trust debt assumption regarding SBM issued straight bonds totaled to JPY100 billion 7 SBM assumption of the debt liability on a non-recourse basis of JPY82.5 billion regarding BBM subordinated loan of JPY100 billion *1 Includes transaction cost relating to refinancing. II Summary of each transaction The summary of each transaction is as stated as below. Refer to the attachmentfor the scheme of this matter. This refinancing adopts a whole businesssecuritization (WBS*2) scheme to raise funds. Adoption of the scheme enables ahigher certainty of repayment of the funds based on cash flow generated from themobile communications business. It results in a higher rating that reducesfunding cost compared to that of a normal borrowing. *2 WBS: Whole Business Securitization is one of structured financing schemes.WBS securitizes business based on cash flow generated from the business to gaina higher certainty of repayment of funds. 1 Borrowings by SBM totaled to JPY1.45 trillion Mizuho Trust & Banking Co., Ltd. ("the lender"), the Tokutei Kingai TrustTrustee that is entrusted the proceeds by WBS Funding*3 will lend loans to SBM ("SBM Loan"). The key terms and conditions of SBM Loan are as stated as below. *3 WBS Funding is an SPC in the WBS scheme whose purpose is to allot theproceeds from domestic and overseas financial institutions and investors as alender to SBM through Tokutei Kingai Trust Trustee. Borrower SOFTBANK MOBILE Corp. Lender Mizuho Trust & Banking Co., Ltd. as the Tokutei Kingai Trust Trustee Total amount of borrowings JPY1.45 trillion of which, Tranche1 JPY1.15 trillion Tranche2 JPY125 billion Tranche3 JPY175 billion But the amount to be received at SBM side is planned to be the amount after withdrawing transaction cost and relative other costs. Longest maturity Tranche1 10 years Tranche2 13 years Tranche3 13 years Interest rate To be determined (planned to be disclosed on the loan execution day) Financial and operational target Financial target includes the amount of reduction in cumulative debt and EBITDA, and operational target includes number of subscribers. As long as the financial target and the operational target are achieved, a certain flexibility of business operation is allowed such as new service launch, capital investment and others. Key covenants Range of CAPEX amount, scope of operation, restriction on sale and disposal of key assets and others. Collateral Assets owned by Mobiletech, BBM, SBM and the SBM's wholly-owned subsidiaries (4 companies in total) Loan execution date 30 November 2006 (planned) 2 Repayment of the borrowings (JPY1,173.8 billion) based on Bridge Facility Agreement contracted by BBM (totaled to JPY1.28 trillion) BBM will raise funds from SBM ("BBM Loan") and will repay JPY1,173.8 billion on30 November 2006 (planned) that was financed by 17 financial institutions basedon Bridge Facility Agreement on 27 April 2006. 3 Modification of the terms of class 1 preferred stock already issued by BBM The terms on dividend, redemption, and others of the class 1 preferred stockissued to Vodafone International Holdings B.V. ("Vodafone") and Yahoo JapanCorporation will be amended. The relative shares will be redeemed after SBMLoan is fully repaid. 4 Determination of terms of class 2 preferred stock to be issued by BBM (classified stocks with veto rights) (1) Purpose of issuance In WBS scheme, lenders(*4) assume only future cash flow to be generated fromSBM mobile communications operation as a repayment source to the loans.Therefore, the most important issue for the lenders is establishing and securinga mechanism which allows SBM's stable and sustainable mobile communicationsoperation. The issuance of class 2 preferred stock (classified stocks with veto rights) isan arrangement to realize a deterrence to eliminate arbitrary actions by BBM,SBM's parent company, at the level of the board of directors as well as at thelevel of shareholders meeting that was requested by the lenders as a part ofestablishment and securement of a mechanism to materialize stable andsustainable mobile communications operation by SBM. *4 "The Lender" is formally Mizuho Trust and Banking Co., Ltd. as Tokutei KingaiTrust Trustee entrusted by WBS Funding, however, it is neither WBS Funding norMizuho Trust and Banking Co., Ltd. who makes independent decisions but they willmade through agreement among domestic and overseas financial institutions andother investors that raise in effect funds. (Lenders, WBS Funding, domestic andoverseas institutions and other investors are hereinafter collectively referredto as gthe Lenders.h) Individuals and entities that SOFTBANK controls or iscontrolled by are not included in the domestic and overseas financialinstitutions and institutional investors as substantial stakeholders. (2) Planned allottee As a part of WBS scheme, BBM plans to issue 1 share of classified shares withveto right to Mizuho Trust and Banking Co., Ltd., as the Tokutei Kingai TrustTrustee. Also, all the shares (including classified shares with veto right)issued by BBM includes restriction of transfer. (3) Rights (a) Shareholder will be provided with rights to select and dismiss oneindependent director of BBM as long as WBS loan remains in lender side. (b) Shareholders with classified shares with veto right will be providedwith veto rights on following items as long as WBS loan remains in lender side; i Additional funding ii Start of new business iii Any change to the Articles of Incorporation on allowance which wasmade at the time of introduction of WBS structure iv Issue of shares, share acquisition rights, or other rights allowingthe acquisition of shares (including securities convertible to shares) v Filing of a petition for dissolution vi Filing of a petition for bankrupcy (c) Classified shares with veto right will be issued due to lenders'request, therefore it will be structured for redemption after BBM buy back basedon acquisition terms when WBS loan repayment completes. Above-mentioned this time classified shares with veto right is only issued toprovide necessary scope of right for the purpose of protection from unscheduledarbitrary or improper execution of shareholderfs right by BBM with the object ofstable continuity of SBM business under WBS structure, and this is not forprotection of SOFTBANK shares' acquisition. 5 Establishment of security interests over the assets of Mobiletech, BBM, SBM and SBM's wholly-owned subsidiaries (4 companies in total) Under WBS structure, to execute SBM Loan, mortgage, securities, and securityassignments will be established over all the assets (real property, movableproperty, receivables, shares held in subsidiaries, and others) in principlethat are owned by SBM and SBM shares owned by BBM and BBM shares owned byMobiletech. 6 Trust debt assumption regarding SBM issued straight bonds totaled to JPY100 billion SBM will entrust certain amount out of the past issued JPY 100 billion straightbond to a trust bank as cash for redemption of bonds together with investmentprofit of this trust asset. Since this transaction falls under Article 46 ofpractical guideline regarding financial products accounting (Article 14 ofAccounting system committee report of Japanese Institute of Certified PublicAccountants), it will be off-balanced from trust debt assumption. Subject Bonds SOFTANK MOBILE Corp.*5 First Coupon 2.575% Series Unsecured Bond Issue Date April 28, 1998 Maturity Date April 28, 2008 Issue price JPY 25 billion Outstanding after redemption As above SOFTBANK MOBILE Corp. *5 Third Coupon 2.500% Series Unsecured Bond Issue Date August 19, 1998 Maturity Date August 19, 2010 Issue price JPY 25 billion Outstanding after redemption As above SOFTBANK MOBILE Corp. *5 Fifth Coupon 2.000% Series Unsecured Bond Issue Date August 25, 1998 Maturity Date August 25, 2010 Issue price JPY 25 billion Outstanding after redemption As above SOFTBANK MOBILE Corp. *5 Seventh Coupon 2.280% Series Unsecured Bond Issue Date September 22, 2000 Maturity Date September 22, 2010 Issue price JPY 25 billion Outstanding after redemption As above *5 Notation of face of bond is JAPAN TELECOM CO., LTD. This is issued at thetime company name of Vodafone K.K., current SBM, was JAPAN TELECOM CO., LTD.This is different from First Series and Second Series bond issued by JAPANTELECOM CO., LTD, former SOFTBANK TELECOM Corp. 7 SBM assumption of the debt liability on a non-recourse basis of JPY82.5 billion regarding BBM subordinated loan of JPY100 billion For the subordinate loan of JPY 100 billion financed from Vodafone by BBM,remaining of JPY 82.5 billion will be treated as debt assumption by SBM once BBMprepays JPY 17.5 billion to Vodafone with BBM loan and loan from SOFTBANK. III Impacts on financial results Impacts on consolidated financial results for the fiscal year ending March 2007by the execution of these transactions are not certain as of today and will becommunicated as soon as when confirmed. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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