5 banks lend 1.4 trillion yen to Japanese funds to buy Toshiba

Sumitomo Mitsui Banking Corp and four other Japanese banks will lend a total of about 1.4 trillion yen to a domestic mutual fund to help it buy up Toshiba Corp, a source familiar with the matter said on Thursday.

A document promising the combined loan will be sent next week to Japan Industrial Partners Inc., which has already received an investment offer worth about 1 trillion yen from a group of more than 20 Japanese companies including Orix Corp. The takeover of the embattled conglomerate is expected to be between 2.2 trillion yen and 2.5 trillion yen.

Japan Industrial Partners is leading a consortium that has identified Toshiba as the preferred bidder for the potential acquisition. His plan to rebuild the conglomerate hinges on privatizing it.

Among the five banks, SMBC and Mizuho Bank are each expected to contribute between 400 billion and 500 billion yen to the loan amount, Sumitomo Mitsui Trust Bank between 200 and 250 billion yen, MUFG Bank 150 billion yen and Aozora Bank about 50 trillion yen, the source said .

In addition to acquisition financing, the loans include a 200 billion yen line of credit to be used as working capital after Toshiba is privatized. Even after privatization, banks are considering seconding staff to support management.

Earlier in October, Toshiba selected the consortium as the preferred bidder to Japan Investment Corp, a government-backed fund that plans to partner with Bain Capital on the acquisition.

The consortium is also negotiating with the banks to invest in the company through preferred stock, which would give them priority over common shareholders in terms of dividends and other benefits.

Toshiba is struggling to recover from problems such as a storefront scandal and massive losses at its US nuclear power business that surfaced in the 2010s.


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