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Alibaba seeks $4-billion in financing for Yahoo stake

A Yahoo! billboard is seen in New York's Time's Square January 25, 2010.

© Brendan McDermid / Reuters/Brendan McDermid/REUTERS

Alibaba Group is seeking up to $4-billion (U.S.) in debt financing, sources said on Thursday, in a deal expected to help the Chinese e-commerce giant buy back a 40-per-cent stake in the company owned by Yahoo Inc.

As Alibaba Group is private, there is no public figure on what Yahoo's stake is worth, though some analysts say its worth at least $9-billion.

Sources close to the matter said Rothschild, which is acting as debt adviser to Alibaba, had sent out term sheets to banks requesting underwritten proposals for the debt financing. The tenor of the debt is expected to be up to three years. Reuters was unable to obtain a copy of the term sheets.

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Alibaba Group, founded by billionaire entrepreneur and former English teacher Jack Ma, declined to comment.

Alibaba, which counts a hugely popular business-to-business platform among its services, has long signalled its intention to buy back the Yahoo stake.

Mr. Ma's feud with Yahoo and his plans for the stake gained renewed attention lately with Yahoo the subject of takeover interest.

Blackstone Group and Bain Capital are preparing a bid for all of Yahoo Inc., Reuters reported earlier this month, with Alibaba among its partners for the roughly $25-billion deal. Japan's Softbank Corp is also part of that consortium.

A source familiar with the matter cautioned on Thursday that the entire situation between the consortium and Yahoo remains fluid, and that no final decision has been made on any move that Alibaba or the other corporates plan to make.

For the Alibaba debt financing, banks have been asked to provide underwritten commitments of $1-billion with an expected final hold of $400-million, according to one of the sources on Thursday.

In November, Yunfeng Capital -- co-founded by Alibaba's Ma -- Silver Lake and other investors completed the purchase of a 5 percent stake in Alibaba Group worth $1.6-billion.

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Alibaba, as a parent company, holds a 73.12-per-cent stake in Hong Kong listed Alibaba.com Ltd.

A Rothschild representative was not immediately available for comment.

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