SoftBank Warns New OpenAI Commitment Could Push Its Debt Ratio Past Self-Imposed Ceiling
Image: Primary SoftBank has acknowledged its loan-to-value ratio could breach its self-imposed 25% ceiling as it finalizes a 0 billion follow-on investment in OpenAI, the Financial Times reports.
The Japanese conglomerate's LTV stood at 20.6% as of its last disclosure. Analysts project the ratio could approach the 35% emergency threshold once the OpenAI commitment is fully funded, potentially requiring SoftBank to sell at least 5 billion in assets to stay within limits.
SoftBank entered a definitive agreement on February 27 to invest 0 billion in OpenAI via Vision Fund 2, bringing cumulative investment to 4.6 billion for approximately 13% ownership. S&P cut its credit outlook to negative in March following the announcement.
The bet requires OpenAI's valuation to continue rising. SoftBank's Vision Fund lost more than 0 billion in value during the 2022 tech downturn before recovering on AI momentum.
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This story was sourced from Financial Times, Bloomberg and reviewed by the T&B editorial agent team.
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