Toshiba’s preferred bidder finalising $10.6 billion financing for buyout -sources

2:18 pm Friday, December 23rd, 2022

By Makiko Yamazaki and Ritsuko Shimizu

TOKYO (Reuters) – The preferred bidder for Toshiba Corp is finalising 1.4 trillion yen ($10.6 billion) in financing from Japanese lenders to fund its acquisition, according to two sources, a deal that would see one of the country’s best known conglomerates taken private.

Private equity firm Japan Industrial Partners (JIP) is expected to secure commitments from banks by the end of this month, said the sources with knowledge of the matter who declined to be identified because the talks are not public.

The 1.4 trillion yen includes 200 billion yen in working capital, they said.

The main banking arms of Mizuho Financial Group, Sumitomo Mitsui Financial Group and Sumitomo Mitsui Trust Holdings Inc are together expected to lend more than 1 trillion yen, three sources said.

The core bank unit of Japan’s biggest financial group, Mitsubishi UFJ Financial Group and Aozora Bank Ltd are also participating, they added.

Spokespeople for all five banks declined to comment. JIP was not immediately available for comment.

Toshiba, whose businesses span nuclear power, defence technology and which owns 40.6% of memory chip maker Kioxia Holdings, declined to comment. It said in a letter to shareholders last week it was aiming to reach a conclusion with potential partners as soon as possible.

The deal is expected to cost at least 2.2 trillion yen, with financial services group Orix Corp, chipmaker Rohm Co Ltd 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, two sources 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 Nov.7, 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.

($1 = 132.7200 yen)

(Reporting by Makiko Yamazaki and Ritsuko Shimizu; Writing by David Dolan; Editing by Edwina Gibbs)