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I wonder how are the downside-protecting elements and that unusual debt based financing structure affecting Uber and other large companies that SoftBank invests
by polskibus 8y ago
I wonder how are the downside-protecting elements and that unusual debt based financing structure affecting Uber and other large companies that SoftBank invests in. Is it possible that Uber collapses because of the 7% yearly coupon that SoftBank fund must produce ?
- kenneth 8y agoThere is no risk of SoftBank's financial situation causing a collapse at one of the companies in which they hold a minority stake. The worst that could happen is they don't fund Uber the next time they need funding.
- polskibus 8y agoThat would depend on the term sheet, wouldn't it? 7% guaranteed yearly return may require unusual conditions on the investment side.
- andrestan 8y agoSure, that's possible but then you're just dealing with relatively blind speculation. I would assume there's no issues on the investment side unless there's strong reason to believe there is.
- _jal 8y agoThe article offers one reason to wonder: > [...] its term sheets — from what I hear — are heavily laden with economic terms that give SoftBank huge downside protection. How much weight you want to give that, well.
- josgala 8y agoMy guess would be generous liquidation preference and possibility to force IPO or liquidation event.
- whatok 8y agoThere's no chance that a collapse is immediately caused but if SOFTBK reaches a point where they closed off from capital markets, one of their best ways to raise cash is to sell their stakes in some company. I don't think it could happen with Uber just given the ownership breakdown but it could absolutely happen with another one of their stakes.