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Greensill Capital Update

A loan from the failed financial company Greensill Capital became the core of the battle for control of an American car rental startup, and SoftBank competed with the company’s founders.

Fair, a troubled car rental company in Santa Monica, borrowed from Greensill at the end of 2019. One year later, SoftBank’s US$100 billion Vision Fund invested more than US$300 million in the business.

In early December 2020, when Greenseal faced Escalating regulatory review According to people familiar with the matter, as its financial situation began to deteriorate, SoftBank acquired the group’s $315 million loan to Fair.

Fair is now considering restructuring its balance sheet through debt-to-equity swaps and potential bankruptcy applications. Although SoftBank will retain shares because of its ownership of the debt, this move will eliminate other shareholders including Fair founder and chairman Scott Painter.

The fight around Fair not only highlights how the impact of Greensail’s implosion in March (which triggered the biggest lobbying scandal in British politics in decades) continues to expand, but also the group’s deep ties to SoftBank.

and also Invest in Greenhill, SoftBank’s Vision Fund also set up a project to see supply chain finance experts Bulk lending Other start-ups supported by this Japanese technology group.

Shareholders including Fair founder and chairman Scott Painter will be wiped out by the proposed reorganization © Nicholas Hunt/Getty

According to people familiar with the matter, SoftBank clashed with Painter on Fair’s direction.Debt-to-equity swaps will hinder the 52-year-old entrepreneur’s efforts to regain control of Fair in the following ways Next car, A new company he founded last year.

Fair CEO Brad Stewart (Brad Stewart), who was a transformation expert on skydiving last year, said that the company “does its best to enable NextCar to acquire the company within six months.”

“SoftBank finally concluded that the other party has no intention to shut down,” he said.

Painter told the Financial Times that although he was unable to comment on “any confidential board affairs,” he was “disappointed to hear Mr. Stewart and Mr. Fair describe the NextCar proposal.”

“NextCar submitted an offer on December 11, 2020, and an improved offer in early March,” he said. “These offers are funded by committed capital. These proposals were rejected.”

SoftBank and Greenhill declined to comment.

If the restructuring continues, Fair will become the second company backed by SoftBank to apply for bankruptcy from Greensill, following closely behind. U.S. construction startup Katerra In June.

A person familiar with the matter said that when buying Greensill’s loan to Fair, SoftBank and its Vision Fund adopted a more typical strategy related to distressed debt investments.

“This is a venture fund, but it can also be a vulture fund when needed,” he said.

However, Stewart pointed out that SoftBank had purchased Greensail’s loan at face value, adding that according to its planned restructuring, the Japanese group should eventually become a minority shareholder in Fair. Fair plans to merge with another company and raise new investments to get rid of the debt-intensive car rental business.

Fair’s previous business model was based on providing a “subscription” service, where customers paid for driving a used car on a monthly basis.After the company borrowed from Greensea Encounter difficulties It stems from the misleading expansion of rental cars to drivers for another company backed by SoftBank, Uber.

According to a person familiar with the matter, Fair used Greensail’s loan to repay approximately $450 million in existing debt, mainly from banks. This also includes a $50 million bridge loan from SoftBank, which the Japanese group provided a few months ago in exchange for additional equity warrants for the company.

Documents seen by the British “Financial Times” show that Greensill’s loan guarantees all Fair’s assets “including all intellectual property rights”, which allows lenders to easily seize control of the company when the company defaults. The documents also show that the loan benefited from a guarantee from SoftBank.

The documents show that Greensill is taking a sign of aggressive loans. Its loan to Fair is likely to grow to $2 billion, which will “enable Fair to purchase more cars to support its growth.” However, with the company laying off employees in 2020, Fair has never withdrawn so much from the loan line.

Stewart said Fair’s debt problems predated Greensill’s loan because the company defaulted on the line of credit owed by mainstream lenders in 2019.

“Most venture capital companies will not raise large amounts of debt. If they do, they will not default,” he said. “Greensail rescued them. Then Softbank Group rescued Greensail.”

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