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REUTERS/Kim Kyung-Hoon/File Photo Toshiba logos are pictured at Toshiba Corp’s annual general meeting with its shareholders in Tokyo, Japan, June 25, 2021.
Jiji Press
11:15 JST, January 21, 2023
TOKYO (Jiji Press) — Japan Industrial Partners Inc. is struggling to obtain agreement from a bank syndicate on expected loans to finance the investment fund’s planned acquisition of Toshiba Corp., sources have said.
JIP, the preferred bidder for the electronics and heavy machinery giant, is negotiating with the group of five Japanese banks, hoping to secure up to ¥1.4 trillion in loans by the end of January.
The two sides are still apart over financial covenants on conditions the borrower must fulfill if Toshiba’s financial health deteriorates again, the sources said.
The acquisition of Toshiba is estimated to cost ¥2.2 trillion.
Of the amount, JIP plans to procure ¥1 trillion in investments from about 20 companies including leasing firm Orix Corp., semiconductor maker Rohm Co. and Chubu Electric Power Co.
Under JIP’s plan, the remaining ¥1.2 trillion will be financed with loans from the syndicate of Sumitomo Mitsui Banking Corp., Mizuho Bank, Sumitomo Mitsui Trust Bank, MUFG Bank and Aozora Bank.
JIP also hopes to procure a ¥200 billion line of credit from the syndicate to cover buyout transaction fees and Toshiba operating expenses. The Tokyo-based fund will also consider raising funds through subordinated loans and preferred shares.
JIP plans to accelerate Toshiba’s reconstruction after taking the company private through the buyout.
Meanwhile, the bank syndicate sees the need to prepare for the possibility that Toshiba’s reconstruction efforts will fail by securing a repayment guarantee and agreement to accept loan rate hikes through financial covenants.
JIP aims to obtain a letter of commitment from the syndicate before making its final acquisition proposal to Toshiba. It previously planned to secure the loans by the end of last year.
There is no deadline for submitting the final proposal. But if their negotiations fail to progress, JIP may have to reconsider how to proceed with the acquisition plan, a source said.
