Want CNET to notify you of price drops and the latest stories?

Softbank unloads most of its 4 percent stake in Yahoo

The Japanese Web and telecom giant sells most of its Yahoo stock to repay a 2004 loan, posting a one-time $994 million gain on the deal.

Jay Greene Former Staff Writer
Jay Greene, a CNET senior writer, works from Seattle and focuses on investigations and analysis. He's a former Seattle bureau chief for BusinessWeek and author of the book "Design Is How It Works: How the Smartest Companies Turn Products into Icons" (Penguin/Portfolio).
Jay Greene
2 min read

Softbank has agreed to repay a $1.135 billion loan to Citigroup by selling most of its 4 percent stake in Yahoo.

The Japanese Web and telecom company said in a press release that it plans to transfer its Yahoo shares to Citigroup as repayment for a 2004 loan. After unloading the stock, Softbank has reduced its Yahoo stake to just 0.002 percent.

The original agreement called for Softbank to repay the loan with either cash or the Yahoo stock. With Yahoo's shares tanking since the deal was signed, Softbank netted a huge profit on the deal. The shares it returned to Citi are worth about $660 million, leading Softbank to record a one-time gain of $994 million, the difference between the price it paid in 1995 for its Yahoo stake and the current value of the loan.

The sale will close in late September.

In a statement, Yahoo downplayed the significance of Softbank's decision to sell the stock, saying it was part of the terms of the 2004 loan agreement.

"The loan involved a forward contract that would be settled by delivering shares of Yahoo! to Citibank upon maturity," Yahoo said in a statement.

Of course, Softbank could have also repaid the loan with cash, but chose not to because the value of those Yahoo shares had sunk so considerably since 2004.

Softbank and Yahoo have both been embroiled in the acrimonious negotiations over Alibaba's spinoff of the Alipay electronic payments service. That said, the timing of the stock sale was predicated by the terms of the loan agreement.