SoftBank Loan Stalls: OpenAI Stake Fails as Collateral

SoftBank's attempt to secure a $6 billion loan using its OpenAI stake has stalled. The company reportedly sought to pledge its entire OpenAI position as collateral. Talks for this margin loan failed to progress, even after SoftBank reduced its target from $10 billion down to $6 billion. Technology commentator Ed Zitron suggests SoftBank was offering over $60 billion in paper value from its OpenAI stock to borrow $6 billion. This implies a loan-to-paper-value ratio of about 10%. What's interesting is that OpenAI was valued at $852 billion after its March 31 funding round. Despite this high valuation, creditors hesitated, leading SoftBank to cut its loan target. SoftBank is now considering other financing options. The company has already used debt to fund its AI strategy, securing a $40 billion bridge loan in March for OpenAI investments and other needs. The bottom line is that the market is struggling to value private companies like OpenAI when they are used as loan collateral.