Japan's Softbank offloads 4 percent Yahoo stake to repay loan

TOKYO Fri Aug 26, 2011 6:14am EDT

TOKYO (Reuters) - Japanese telecoms firm Softbank (9984.T) said on Friday it would offload almost all its 4 percent stake in Yahoo Inc (YHOO.O) to repay a loan of about $1.1 billion owed to Citibank (C.N).

Softbank said it would transfer the Yahoo shares to Citibank N.A. C.UL to pay off a $1.135 billion loan it took from the bank in 2004.

However, Yahoo shares have fallen about 45 percent since then, meaning the market value of the stake is now closer to $660 million.

Softbank said the transaction was provided for under the agreement by which it obtained the loan, allowing it to repay either in cash or Yahoo shares.

Softbank will book a special gain of about 76.4 billion yen ($986.4 million) for the year ending next March, boosting its net profit by about 44.7 billion yen.

It will retain a negligible 0.002 percent stake in Yahoo Inc.

The deal marks a small step in unwinding a complex web of cross-shareholdings between Softbank, Yahoo Inc, their jointly owned Yahoo Japan (4689.T) unit and Chinese Internet giant Alibaba Group.

Relations between Yahoo, Softbank and Alibaba have soured in recent years with Alibaba founder Jack Ma agitating to buy back Yahoo's roughly 40 percent stake in his company. Softbank founder and major Yahoo shareholder Masayoshi Son has openly attacked Yahoo's track record as an innovator and its approach to international markets.

Softbank, Japan's third-largest wireless carrier, controls 42 percent in Yahoo Japan (4689.T). Yahoo Inc owns a 35 percent stake in the unit.

Earlier this year, sources said Yahoo was in talks to quit its Japanese joint venture and transfer its stake to Softbank.

But officials at both Softbank and Yahoo Japan said the ownership structure of Yahoo Japan would remain unchanged.

Yahoo's relationships with Softbank, Yahoo Japan and Alibaba are at the top of investors' minds because the U.S. company's Asian investments are deemed its most valuable assets. Some analysts estimate they make up almost all of Yahoo Inc's $16.6 billion market value.

"If this were Yahoo Japan, it would be a big deal but it's not," Aizawa Securities analyst Yoshitsugu Sasaki said.

"This just looks like Softbank's attempt to improve its finances."

($1 = 77.450 Japanese Yen)

(Additional reporting by Chang-ran Kim in TOKYO and Melanie Lee in SHANGHAI; Editing by Michael Watson and Lincoln Feast)

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