In a major blow to Snapdeal, Japanese investor SoftBank has withdrawn a $150-200 million debt financing it had offered to the company, as per a report by Economic Times . The withdrawal will be a major blow to Snapdeal as it is in desperate need of funds to get back on its feet.
The reason behind the withdrawal is a result of a boardroom battle among the investors Kalaari Capital, Nexus and the largest stakeholder Softbank. Kalaari Capital and Nexus have questioned the intentions of SoftBank. As per reports, a disagreement has occurred between the stakeholders over Softbank’s offer for a stake in the merged entity (when a merger with Flipkart takes place) than a cash investment.
“There was a term-sheet offering Snapdeal debt financing for a period of three years, which was, inexplicably, withdrawn within days, giving credence that SoftBank has made up its mind about selling the company,” sources told ET.
The other stakeholders have accused SoftBank of trying to take decisions without involving everybody.
Not the First Instance of Withdrawal
This boardroom animosity between SoftBank and others are hardly a first.
In December 2016, SoftBank had offered a direct $50 million monthly injection to Snapdeal on the condition of a potential merger. There again the stakeholders clashed, with Kalaari and Nexus Venture Partners asking SoftBank to guarantee the funding instead.
Currently, SoftBank has two seats on the board and owns 33 percent stake making it Snapdeal’s largest shareholder. Kaalari and Nexus have one seat each.
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