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Pastimes : Ask Mohan about the Market
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To: Rational who wrote (9054)11/23/1997 9:26:00 AM
From: Zeev Hed  Read Replies (1) of 18056
 
Sankar: while their might be good fundammental reasons for Softbank to cash in their winnings in YHOO, I do not think that your argument is valid. As you stated yourself, to improve their capital ratio Softbank will want to have its loans outstanding to others repaid and use this cash to pare down their own liabilities. The YHOO stock is on their asset side and they want to keep it as asset. Selling the stock and paying their own outside debts will require that they call in 9 times as much debt to be repaid. For each dolar of asset they can create (or maintain on their book) $12.5 in loans, why would they want to sell these assets to repay their own loans? I think they would prefer to put pressure on their own borrower to pay back loans and in this fashion maintain their assets ratio at or above the IBS requirement of 8%.

Zeev
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