Loans from failed financial firm Greensill Capital are at the heart of the dominance struggle in American car leasing startups that has left SoftBank in a fight with the company’s founders.
In late 2019, a year after SoftBank’s $ 100 billion Vision Fund invested more than $ 300 million in its business, the Santa Monica-based Fair leasing company borrowed from Greensil.
In early December 2020, collided with the Green Sill Escalating regulatory review SoftBank honestly bought the group’s $ 315 million loan, according to sources familiar with the matter.
Fair is currently considering restructuring its balance sheet through equity swaps and filing for bankruptcy. Softbank will hold the shares against debt, but such a move would destroy other shareholders, including Fair founder and chairman Scott Painter.
The controversy over the fair continues to exacerbate the aftermath of the March green window sill explosion, which sparked the biggest lobbying scandal in British politics in decades, as well as the group’s close ties to Softbank. Emphasizes what he had.
such as Invest in Green Sill, SoftBank Vision Fund has also launched a program that attracts supply chain finance professionals. Large rental volume Other start-up companies backed by a Japanese tech conglomerate.
Softbank fell out with the artist over the direction of the fair, according to people familiar with the matter. Debt swaps on stocks will prevent 52-year-old entrepreneurs from regaining control of the fair. NextCarHe founded a new company last year.
“We did everything we could in six months to get NextCar to buy the company out,” said Brad Stewart, CEO of Fair, who jumped last year. ..
“SoftBank finally came to the conclusion that it wasn’t going to close on the other side,” he said.
“I was disappointed to hear Stewart and Fair characterize the NextCar offering,” the FT artist told the FT, although he was unable to comment on “government secrets.”
“Next Car made an offer on December 11, 2020 and improved the offer in early March,” he said. “The proposal was financed from the capital invested. The offer was rejected. “
Softbank and Greensil declined to comment.
As the restructuring progresses, Fair will become the second SoftBank-backed company to borrow from Greensil and file for bankruptcy. Construction startup in the USA Katerra In June.
One person familiar with the matter said that SoftBank and its Vision Fund in general used bad debt investing tactics when purchasing a loan for Greensil’s Fair.
“It’s a venture fund, but it can be a vulture fund when you need it,” he said.
However, Stewart noted that SoftBank acquired the Greensil loan at par, adding that the Japanese group should eventually become a minority shareholder in the fair as part of a planned restructuring. Fair plans to move away from its long-standing car leasing business and merge with other ventures to increase new investment.
Fair’s previous business model was based on a “subscription” offering where customers paid a monthly fee to drive a used car. The company that later borrowed from Green Sill Face difficulties This is due to the false extension of car leasing to drivers of another SoftBank-backed company, Uber.
Fair used the Greensil loan to pay off roughly $ 450 million in existing debt, mostly to banks, according to someone familiar with the matter. This includes a $ 50 million bridging loan from Softbank. It was provided to the Japan Group a few months ago in exchange for an additional guarantee for the company’s shares.
Greensill’s loan is secured by all of the fair’s assets “including all intellectual property rights,” according to the FT document, making it easy for lenders to take control of the company in the event of a default. You can do that. The document also shows that the loan was guaranteed by SoftBank.
Lending to the fair could rise to $ 2 billion, according to the document, a sign that Greensil is actively lending. This was “so that the fair could buy more cars to support its growth.” However, the fair has never attracted so much credit since the company shrank in 2020.
Stewart said the fair debt problem arose prior to Greensill’s loan, as the company defaulted on previous lines of credit with major lenders in 2019.
“Most VCs don’t raise shitty debt. If so, they are not default, ”he said. “Green Sill saved them and SoftBank Group saved them.”
Greensill Credit Launches Battle for Control of US Car Launches Link to source Greensill Credit Launches Battle for Control of US Car Launches