Alibaba restructures Alipay agreement; Yahoo ticks higher

|By:, SA News Editor

In a new F-1, Alibaba (Pending:BABA) discloses it has restructured its agreement with Chinese online payments giant Alipay and its parent, Small and Micro Financial Services.

Most notably, Alibaba will receive a 37.5% stake in Small and Micro/Alipay in the event of an IPO featuring a $25B+ valuation and $2B+ in gross proceeds. The deal is contingent on Alibaba's stake in Small and Micro not having reached 33% at IPO time. Previously, Alibaba's Alipay IPO payout was capped at $6B.

In the meantime, Alibaba will receive 37.5% of Small and Micro's pre-tax income in exchange for IP licensing and "software technology services." Its profit payout will be reduced in proportion to the equity stake it obtains in Small and Micro.

Alibaba is also selling assets related to its loan business for small/mid-sized companies (SMEs) to to Small and Micro for $518M, and entering into "software system use and service agreements" related to the SME loan business in exchange for an annual fee. From 2015-2017, the fee will be 2.5% of the average daily book balance for micro loans.

Yahoo (NASDAQ:YHOO) is up 0.8% AH.

Related tickers: OTCPK:SFTBF, OTCPK:SFTBY