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SoftBank Group said it will split into two companies, putting U.S.-based Sprint ( S ), its stake in China’s Alibaba ( BABA ) and other overseas operations into one entity. In its statement, SoftBank,, which is Sprint’s majority owner, did not say how the restructuring would affect its sizable debt. Credit rating agencies have not yet commented on the move. Nikesh Arora, SoftBank Group president, will head up operations abroad, the company said. The other entity will include SoftBank’s mobile operations in Japan, including its investment in Yahoo Japan ( YHOO ). SoftBank founder Masayoshi Son will control both companies. SoftBank shares closed 1.8% lower Monday on the Tokyo stock exchange before the announcement. Sprint stock was up 1.5% in early trading in the stock market today , near 4. Sprint has struggled vs. Verizon Communications ( VZ ), AT&T ( T ) and T-Mobile US ( TMUS ). According to a Bloomberg report last week, SoftBank is set to establish a subsidiary that will inject capital into Sprint. The subsidiary will accept Sprint’s wireless equipment and part of its wireless spectrum as collateral for $3 billion to $5 billion in loans. Sprint has about $33 billion in debt. Sprint exited Q4 with about $6 billion in liquidity, but continues to burn cash. “With $2.3 billion in debt coming due in 2016 ($10 billion by 2020) and given the widening spreads in the high-yield markets, Sprint has limited options to favorably access capital markets,” said Oppenheimer in a research report. Some analysts have speculated that SoftBank will take a write-down related to the Sprint acquisition. SoftBank paid $21.6 billion for 78% of Sprint, in a deal that closed in 2013. “Sprint’s share price had risen to $4 as of March 3, and we expect SoftBank to avoid asset impairment losses on its stake in Sprint at the parent level if the share price is above the end-September 2015 level of $3.84 at end-March 2016,” said Nomura Securities in a report. Scalper1 News
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