Japan’s SoftBank Group has asked major Japanese banks to provide financial support to help revive its shared-office business WeWork.
According to the Nikkei Asian Review, SoftBank, WeWork’s largest shareholder, is in talks with Mizuho Bank to borrow 300 billion yen. The Japanese conglomerate asked for a 680 billion yen loan, but the amount discussed with the banks was only 300 billion yen.
The move is to cover the 680 billion yen needed to revive the management of U.S. company WeWork.
SoftBank has more than 2 trillion yen in funds, but intends to borrow additional funds to maintain a certain level of cash reserves, the Nikkei said. The banks that SoftBank asked for loans include Mizuho Bank, Mitsubishi UFJ Bank, Mitsui Sumitomo Bank and Mitsui Sumitomo Trust Bank.
Major Japanese banks are carefully considering making additional financial loans as they have already lent SoftBank large amount of money. The banks also invest in SotfBank’s venture fund, Vision Fund. The fund suffered a massive loss due to WeWork’s failed initial public offering.
Softbank posted a net loss of 70.1 billion yen in the second quarter of this year. Net profit stood at 705.8 billion yen during the same period last year. But it swung to the red. It was the first quarterly operating loss in 14 years since the first quarter of 2005, Bloomberg reported.
The non-profit fund particularly posted a huge loss of 970.3 billion yen, dragging down its overall performance. It was the first deficit since April-June 2017. That time was when the release of non-fund earnings began, compared with a surplus of 392.5 billion yen a year earlier.
Softbank plans to continue to invest to prevent further losses from WeWork, but its long-term outlook remains uncertain.
WeWork is a shared office company established in New York in 2010 and has branches in 29 countries. It operates by relocating space and renting it back to companies or individuals after a long-term lease contract with the building owner.
WeWork failed its IPO in September due to doubts over its profitability. Since then, Softbank has provided 10 billion dollars worth of bailout funds to WeWork. Previously, Softbank invested $9.15 billion in WeWork through a vision fund.
Meanwhile, recently Softbank stroke a deal with South Korean giant tech company, Naver.