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Arm liable for $8.5B SoftBank loan if IPO is a no-show
Chip designer has until September to float or it's on the hook for parent company's borrowing
www.theregister.com/, Apr. 18, 2023 –
Brit chip designer Arm could be on the hook for an $8.5 billion loan made to its parent SoftBank if the company's initial public offering (IPO) is delayed or canceled.
Arm was planned to be floated on the stock market within the fiscal year that ended March 31 2023, but due to various complications this has been delayed and is now expected to happen sometime later this year.
However according to the chip designer's most recent accounts, filed with Companies House in London last week, there is an $8.5 billion loan hanging over the company for which it will be liable if it has not filed for its IPO by the end of September, as first spotted by David Manners of Electronics Weekly.
The accounts reveal that another subsidiary of Arm parent SoftBank entered into an agreement with financial intuitions in March 2022 to borrow $8 billion, providing 75.01 percent of Arm's shares as collateral.
Initially, the loan comprised $7.9 billion, plus $0.9 billion as a bridge facility loan. The $7.9 billion was to be repaid in full on maturity, which was to be either three months after the effective date of Arm's public listing or 24 months after the commencement of the loan, whichever was earlier.
On June 24 last year, an amendment letter expanded the loan facility amount to $8.5 billion by an additional $1.4 billion in borrowing, $0.9 billion of which was used to repay the bridge facility, while the remaining $0.5 billion was added to the debt.
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