After gains of 45 percent just last week, SoftBank Group Corp., owners of Sprint, took a sharp turn on Monday when stock prices dropped more than 10 percent following the collapse of one of its investments. According to Bloomberg, U.K.-based satellite operator OneWeb filed for Chapter 11 bankruptcy protection on Friday, raising concerns over the financial health of SoftBank’s unlisted assets. Shares rallied through the day and closed yesterday at $17.46 after having been at their 2020 high of $26.46 on February 11.
In a statement on Friday, OneWeb said it had been close to obtaining financing to fully fund the company through its deployment and commercial launch, but they fell short due to “financial impact and market turbulence” related to COVID-19.
SoftBank founder Masayoshi Son frequently referred to OneWeb as a ‘cornerstone’ of the firm’s investment portfolio for its mission to provide affordable global high-speed to 1 billion subscribers by 2025. Last week, Son revealed plans to raise $41 billion to buy back shares and lower debt. While that announcement sent shares soaring, Bloomberg reported that OneWeb’s bankruptcy announcement caused Moody’s Corp. to cut SoftBank’s debt rating by two notches, saying the Japanese investment firm’s plan to sell off assets during a market downturn threatened its total value. SoftBank’s shares traded 6.7% lower on Monday morning in Tokyo.
OneWeb listed liabilities and assets of more than $1 billion each in its Chapter 11 petition in U.S. Bankruptcy Court in White Plains, New York and said it will pursue a sale process during the proceedings and is in talks for ‘debtor-in-possession financing’ that would allow the company to fund its obligations during the proceedings.
According to court documents, OneWeb owes $238 million to Arianespace, the world’s leading satellite launch company headquartered in Europe.
Founded in 2012, by American tech entrepreneur, engineer, and inventor Greg Wyler, OneWeb launched 74 of its proposed 650 internet satellites into orbit before facing funding failures. OneWeb’s competition included Elon Musk’s SpaceX Starlink project and Jeff Bezos’s Amazon-linked Project Kuiper.