Alibaba seeks $4b loan to support Yahoo buyback

A term sheet is expected to be finalized this week after which lenders can commence due diligence, Reuters Basis Point reported. An earlier term sheet sent out by Rothschild, Alibaba's debt advisor, asked banks to provide underwritten commitments of $1 billion with expected final holds of $400 million.

The debt transaction is said to be priced attractively - a three-year loan with a margin of around 450 basis points over the London Interbank Offer Rate - but the underlying credit is difficult to assess because internet businesses tend to lack tangible assets. Other sources told Basis Point that the limited number of liquidity providers and the structure of the financing are also potential obstacles.

Alibaba's buyback is separate from the reported $25 billion buyout bid for the whole of Yahoo by a consortium comprising The Blackstone Group, Bain Capital and Softbank Corp. Softbank owns 40% of Alibaba and operates Yahoo Japan as a joint venture with Yahoo. The US company's interests in Alibaba Group and Yahoo Japan are estimated to be worth $13 billion and $19 billion, respectively.

Yahoo became the target of buyout firms and trade buyers after CEO Carol Bartz departed in early September. Alibaba's founder Jack Ma followed that news by announcing his interest in buying the entire company, and that he had spoken to potential partners that were thought to include Silver Lake and Temasek Holdings.

In November, Silver Lake, Digital Sky Technologies, Temasek and Yunfeng Capital - a VC fund set up by Ma - purchased a 5% stake in Alibaba Group for $1.6 billion.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Technology
• Greater China
• North America
• Buyouts
• Alibaba Group
• Jack Ma
• Softbank China & India Holdings
• The Blackstone Group
• Bain Capital Asia
• TMT
• buyout