Japanese telecoms and Internet conglomerate Softbank Corp. plans to raise about 1.4 trillion yen (6.31 billion pounds) by securitising the cash flow of its Vodafone Japan operations, a source close to the matter said on Tuesday.

The scheme will set aside cash from Vodafone Japan for loan interest and principal payment. It also ensures that earnings generated by Vodafone Japan, the country's No. 3 carrier, will be used primarily to repay debt.

Softbank's stock rose 4.3 percent to 2,200 yen by midday, while the benchmark Nikkei average was flat.

Softbank, which is in the process of refinancing the short term loan it borrowed to buy Vodafone Group Plc's local unit, said it was finalising terms and expects to decide a general outline of a long term loan by the end of September.

The company has said the long term debt will be a mixture of bonds with different maturities.

Softbank spokesman Naoki Nakayama declined to comment on whether the company planned to securitise its Vodafone Japan operations for the long term loan.

Earlier this year, Softbank bought Vodafone Japan for a total of 1.8 trillion yen and borrowed 1.3 trillion yen in short term bridge loans for the acquisition, arranged by 17 banks led by Mizuho Financial Group, Deutsche Bank AG and Citigroup Inc.

For the one year bridge loan, which lasts to March 2007, Softbank has said it expects to pay about 40 billion yen in interest.

In the year that ended on March 31, Vodafone Japan generated about 300 billion yen in earnings before interest, taxes, depreciation and amortisation.

Nikkei 225 Japan