SoftBank Group Corp. has said it sees a loss of around ¥700 billion in the year ending March on the portion of its WeWork investment held outside the Vision Fund, extending the group's expected net loss to ¥900 billion.
SoftBank maintained its forecast of a record annual operating loss of ¥1.35 trillion, announced earlier this month, as bets via the $100 billion (¥10 trillion) fund sour.
SoftBank is embroiled in a legal dispute with directors at WeWork after backing out of a $3 billion tender offer, agreed when it bailed out the office-sharing firm following a flopped IPO attempt last year.
The tech conglomerate has poured more than $13.5 billion into WeWork, one of a string of troubled bets by CEO Masayoshi Son that have laid waste to SoftBank's full-year earnings and are now being hammered by the spread of COVID-19.
SoftBank's shares were up 2.4 percent in early trading, in line with the benchmark index. The group has launched a record ¥2.5 trillion buyback to support its shares, which CEO Son uses as collateral for loans.
The buyback presents an attractive buying opportunity but it is not a clear long-term investment, said a London-based investor that has built up a small stake.
Asset Value Investors (AVI) has spent around $75 million buying SoftBank shares, drawn by the size of the buyback and a nearly $3 billion position taken by activist investor Elliott Management, which is pushing for measures to improve shareholder returns.
SoftBank "may not be an attractive long-term investment for investors such as ourselves. Right now, it's a special situation opportunity on a massive discount," said Joe Bauernfreund, Chief Executive of AVI.
"Mathematically the share price will go up if they carry out the buyback they promised to do," he said.
A pledge to repurchase and retire up to 45 percent of its shares via buybacks means SoftBank is aligned with investors like Elliott, Bauernfreund said, but the group is yet to demonstrate it can improve transparency and governance.
There is "nothing to base any confidence on," Bauernfreund said, adding AVI has written to SoftBank's directors but has not yet received a detailed reply.
SoftBank has pledged to appoint new independent board directors at its shareholders meeting – although critics point to the company's history of choosing allies of Son.
The highly leveraged conglomerate has been forced into selling down major assets to raise funds, but could receive a big boost from the Bank of Japan's plan to expand corporate bond buying.
SoftBank was sitting on around $160 billion of interest bearing debt at the end of December and has seen bond yields rise as high as 4.5 percent this month.
Portfolio companies are continuing to retreat from a SoftBank-cash fueled push for breakneck growth, with Indian hotel chain Oyo planning to offload more properties around the world, sources said this week.