SoftBank was cautious when partnering with Wirecard.
Last Friday, we discussed how the German Wirecard could probably be the victim of fraud since the company allegedly can't justify almost $2 billion.
In just a few days, things took a turn for the worse, and now, in a statement released today, the company will file for insolvency at the district court in Munich. Moreover, SoftBank, which is in attention due to selling part of its stake in T-Mobile to increase its cash reserves, came again in the spotlight, after it has been found out that it had invested in Wirecard.
Last year, the Japanese conglomerate invested $1 billion in April 2019 in the European company, in order to create an international partnership meant to facilitate digital payments. The deal consists of convertible notes with a five-year maturity. When matured, the notes would have been a 6% stake for SoftBank. According to analysts, for SoftBank, the deal was made in a way that the conglomerate was out of any financial risk. At that time, Wirecard’s numbers were good, and made its way through Germany30, based on data provided by BaFin.
As reports showed, the $1 billion financing came not from SoftBank itself as the balance sheet revealed, but from personal pockets of SoftBank executives, and the Mubadala sovereign wealth fund. On paper, they would be impacted by the latest events.
Wirecard stock price fell more than 80% since the scandal hit the news. Based on the opinion of various specialists, the shares may be worthless.
Sources: marketwatch.com, cnbc.com, finance.yahoo.com
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