Thursday 21 November 2019 10:56 am

MUFG likely to deny Softbank loan over Wework bailout

Mitsubishi UFJ Financial Group (MUFG), Japan’s largest bank, is reportedly likely to withhold additional loans from Softbank to finance the conglomerate’s $9.5bn (£7.3bn) rescue package for struggling office space firm Wework.

Softbank has asked for around ¥300bn (£2.1bn) additional loans for Japan’s three megabanks – MUFG, Mizuho Financial Group and Sumitomo Mitsui Financial Group – in a bid to recoup losses from its large bets on Wework, The Financial Times reported. 

Read more: Softbank in talks to take over KPMG’s private members’ club

The technology investment giant is typically a big borrower from Japanese banks, but is seeking further financing as it attempts to reverse Wework’s flagging fortunes. 

MUFG may reject Softbank’s request if the new loans are used to bail out Wework, according to the FT.

Softbank offered Wework a $9.5bn financial lifeline in October following its failed initial public offering (IPO).

The package involved Softbank providing $5bn of new debt, injecting $1.5bn equity and an offer to buy up to $3bn WeWork shares in exchange for control of the company.

Softbank had already invested around $10bn in the flexible working space company before the rescue package. 

Although Softbank typically has a close relationship with Japanese banks, the country’s top lenders are becoming more cautious about lending to the group given the current turmoil surrounding Wework.

“We have to be very careful about this,” a source close to the loan discussions told Reuters. “Especially if the money goes to WeWork, it will take a long time to conclude the process.”

Read more: New York State Attorney General reportedly investigating Wework

A Softbank spokesperson told Reuters a loan was one of its options but that nothing had yet been decided. All three banks declined its request for comment. 

Softbank posted its first quarterly loss in 14 years earlier this month after soured bets on Wework and Uber dragged its Vision Fund to an $8.9bn loss.

Main image credit: Getty

Share:
Tags: