– Can be interpreted as a disguised sale – E24

The share price of e-learning and contest company Kahoot fell sharply on the Oslo Stock Exchange on Friday morning. The rate fell 17.5 percent to NOK 18.95 at NOK 12.10.

Kepler Cheuvreux analyst Lars Devold follows Kahoot’s stake closely. He believes Kahoot is holding back because its largest owner, Softbank, announced that it had entered into a “total return swap” and equity loan agreement with Kahoot shares.

“The agreement is structured in such a way that it can be interpreted as a disguised sale,” Devold wrote in an email to E24.

– There will be a large accumulation of stocks

Devold explains that Softbank receives cash when the agreement is concluded, but retains the financial risk associated with the Kahoot position and must pay a financing cost to the counterparty.

“As we understand the agreement, the counterparty will be able to borrow Kahoot shares from SoftBank which they can sell on the open market to secure themselves along the way.”

Upon expiration or termination of the agreement, Softbank will, unless they choose otherwise, receive a cash settlement of the shares they lent, i.e. the actual sale, according to Devold.

“The agreement expires on August 22 next year, but it can be terminated immediately. Since SoftBank owns 15% of Kahoot’s share capital, in practice this means that there will be a significant surplus of shares that can be sold in the period until the expiration of the agreement.” , as Devold wrote.

Complex

In the complex exchange announcement, it was mentioned that Softbank had entered into a so-called total return swap agreement with an unnamed financial institution. This is an agreement that means that you exchange the earnings per share for a specified interest rate. This way you get the profit that the stake makes, even if it is already owned by someone else.

In addition, Softbank has entered into a share loan agreement with the financial institution. The counterparty can borrow Kahoot shares and use them to secure their own position, including selling in the market.

According to the report, the financial measures mean that Softbank’s net position in Kahoot as of August 25 is down 306,494 shares.

Clarification: E24 first wrote that Softbank has reduced its exposure to Kahoot stock. What the analyst is suggesting is that Softbank may sell Kahoot shares.