Toshiba bidder JIP still hasn’t secured firm commitments from lenders, sources say

THE preferred bidder for Toshiba was not able finalise its planned 1.4 trillion yen (S$14 billion) in financing for the acquisition as of Friday (Dec 30), two sources said, delaying into next year its effort to secure firm commitments from banks.

Private equity firm Japan Industrial Partners (JIP) had been expected to secure commitments from Japan’s biggest banks by the end of this year, marking a major milestone in its effort to take Toshiba private.

However, financing talks are now likely to continue into the new year, the sources said, declining to be identified because the information has not been made public.

While the size of the financing is largely agreed, talks between JIP and the banks continue, including on the potential dispatch of bank executives to Toshiba following a buyout – to help with its restructuring – as well as issues on future governance, according to one person with knowledge of the talks.

No one was immediately available for comment at JIP. Most Japanese businesses and offices are now closed for the country’s annual new year holidays until Jan 3. A Toshiba spokesperson declined to comment.

The 1.4 trillion yen in financing includes 200 billion yen in working capital, Reuters has previously reported.

The main banking arms of Mizuho Financial Group, Sumitomo Mitsui Financial Group and Sumitomo Mitsui Trust Holdings are together expected to lend more than 1 trillion yen, Reuters has reported, with the core bank unit of Japan’s biggest financial group, Mitsubishi UFJ Financial Group and Aozora Bank also participating.

Toshiba, whose businesses span nuclear power, defence technology and which owns 40.6 per cent of memory chip maker Kioxia Holdings, said in a letter to shareholders this month it was aiming to reach a conclusion with potential partners as soon as possible.

The deal is expected to total at least 2.2 trillion yen, with financial services group Orix Corp, chipmaker Rohm Co and Japan Post Bank among the Japanese companies likely to join JIP in its bid, Reuters has previously reported.

The final cost could potentially change due to market conditions, sources have said.

Toshiba named a JIP-led group as its preferred bidder in October for the buyout process. The private equity firm was then asked by Toshiba to provide commitment letters from banks by Nov7, something it was unable to secure.

But by the start of this month JIP had moved closer to winning the backing of banks after it proposed concrete restructuring steps, sources have previously said.

Once the bid is finalised, investors will be watching closely to see how a Toshiba special committee and its board evaluate JIP’s plan to overhaul the troubled conglomerate. REUTERS