Press Releases 2023
SoftBank Corp. (the “Company”) hereby announces that the Board of Directors passed a resolution on September 25, 2023 to issue Series 1 Bond-Type Class Shares (the “Bond-Type Class Shares”; that issuance, the “Offering”), as described below. In addition, the Company also hereby announces that the Board of Directors passed a resolution on September 25, 2023 to reduce its common stock and additional paid-in capital by the amount of the increase in common stock and additional paid-in capital as a result of the issuance of the Bond-Type Class Shares, effective as of the Payment Date (defined below) of the issuance of the Bond-Type Class Shares through the Offering.
Background and Purpose of the Financing
As announced in its release entitled “Notice Regarding Partial Amendment to Articles of Incorporation and Shelf Registration with Respect to Issuance of Series 1 Bond-Type Class Shares” dated May 24, 2023, in order to continue to balance growth investment with a high level of shareholder returns while making growth investments related to advanced telecommunications and IT technologies and next-generation social infrastructure, the Company has come to the conclusion that it would be desirable to enhance its capital and reinforce its financial base by incorporating equity financing in addition to debt financing.
Against this backdrop, the Company believes that “Bond-Type Class Shares” would be a useful option as a financing method to increase equity capital that would minimize the impact on the interests of existing holders of Common Shares of the Company (the “Common Shareholders”) as much as possible, and would meet the needs of a wide range of domestic investors, including retail investors. As such, the Company passed a resolution at the Board of Directors meeting dated May 24, 2023 to submit a proposal for a partial amendment to the Articles of Incorporation in connection with the establishment of the Series 1 Bond-Type Class Shares through Series 5 Bond-Type Class Shares and related matters (the “Amendment to the Articles of Incorporation”) to the Company's Annual General Meeting of Shareholders on June 20, 2023 (the “General Meeting of Shareholders”) and to file a shelf registration statement with respect to the Bond-Type Class Shares, and filed a shelf registration statement with respect to the Bond-Type Class Shares on May 24, 2023. As the Amendment to the Articles of Incorporation was approved at the General Meeting of Shareholders, the Board of Directors has passed a resolution to issue the Bond-Type Class Shares after determining that the environment for issuing the Bond-Type Class Shares has been prepared, based on comprehensive consideration of the market environment, the development of the Company's business environment, and other factors in light of the product nature of the Bond-Type Class Shares as described below.
Product Nature of Bond-Type Class Shares
The Bond-Type Class Shares are aimed at a wide range of domestic investors while minimizing the impact of dilution on Common Shareholders. The nature of this product is as follows.
(ⅰ) Product nature as “bond-type” class shares
In consideration of Common Shareholders, the hybrid design of the Bond-Type Class Shares provides a combination of “bond-like” features, such as no dividend paid beyond the preferred dividends initially set and no dilution of the rights to vote, and “stock” features, such as the nature to increase equity capital.
For these reasons, the issuance of the Bond-Type Class Shares will enable the Company to realize an increase in equity capital to secure a sound financial base without dilution of the rights to vote of Common Shareholders, while taking into more consideration the impact on the Company's financial indicators, including ROE and EPS for Common Shares*, compared to a capital increase through the issuance of Common Shares.
- *On the assumption that the relevant amounts of the Bond-Type Class Shares (paid-in amount and preferred dividends) will be deducted from the net assets and net income when calculating ROE and EPS for Common Shares
(ⅱ) Product nature similar to that of hybrid bonds
The Company envisions a product nature similar to that of hybrid bonds and is considering a design with the following main features, and plans to have the Bond-Type Class Shares given a certain level of “equity credit” (50% of the amount of funds raised) by certain rating agencies.
- Preferred dividend: Initially, a fixed dividend for approximately five years from the issuance (to be set upon the pricing of the Bond-Type Class Shares) and floating dividend thereafter, senior to Common Shares, cumulative, non-participating
- Clause for acquisition by the Company (call option): The Company may acquire in exchange for cash after the elapse of five years from the issuance, etc.
- Refinancing restrictions: In principle, capital financing of equal or greater value will be required if the Company acquires the Bond-Type Class Shares by exercising its call option, etc.*1
- Rights to vote: None
- Rights to convert into Common Shares: None
- *1In the case of hybrid bonds, it is common for hybrid bonds, etc. with equal or greater capitalization to be issued in accordance with replacement restrictions when the issuer makes early redemption (call).
For this reason, the Company provides up to fifth series of Bond-Type Class Shares authorized to be issued by the Company in the Articles of Incorporation so that other series of the Bond-Type Class Shares can be issued when the Company acquires the Bond-Type Class Shares by exercising the call option.
Meanwhile, as opposed to ordinary hybrid bonds, the amount raised through the issuance of the Bond-Type Class Shares will be recorded as equity for accounting purposes.
(ⅲ) Issuance by public offering in Japan; listing on the TSE
The issuance of the Bond-Type Class Shares will be by public offering in Japan, and the Bond-Type Class Shares will be listed on the Prime Market of the TSE. This is intended to make the product available for investment by retail investors.
(ⅳ) General Meetings of Class Shareholders
Under the Companies Act, shareholders of Bond-Type Class Shares (“Bond-Type Class Shareholders”) may resolve only the matters provided for in such act and the Articles of Incorporation at General Meetings of Class Shareholders. The Articles of Incorporation will require a resolution of the General Meeting of Class Shareholders comprising Bond-Type Class Shareholders if the Company performs any of the following acts and there is any likelihood of causing damage to Bond-Type Class Shareholders.
- a merger with another company as the disappearing company or a share exchange or share transfer with another company as the wholly owned subsidiary company (except for a sole-share transfer conducted by the Company); or
- an approval by the Board of Directors of the Company of a demand for a cash-out by a Special Controlling Shareholder against the other shareholders of the Company.
In order to enable agile and flexible capital policy in the future based on the Offering, the Company has passed a resolution to reduce its common stock and additional paid-in capital, in each case as shown on its statement of financial position, by the amount of the increase in common stock and additional paid-in capital as a result of the issuance of the Bond-Type Class Shares through the Offering, as of the Payment Date, subject to that payment taking place, and to transfer the full amount of both to “other capital surplus.”
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This press release is intended to announce the proposed issuance of the Series 1 Bond-Type Class Shares and the reduction of the Company’s common stock and additional paid-in capital, and it has not been prepared for the purpose of soliciting investments or other conduct of similar nature whether in Japan, the United States, or elsewhere. This press release does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The securities referred to in this press release have not been, and will not be, registered under the United States Securities Act of 1933, as amended (hereinafter the “Securities Act”). The securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. The securities referred to above will not be publicly offered or sold in the United States.
- SoftBank, the SoftBank name and logo are registered trademarks or trademarks of SoftBank Group Corp. in Japan and other countries.
- Other company, product and service names in this press release are registered trademarks or trademarks of the respective companies.