Toshiba Deal Battles Uncertainty As Preferred Bidder Fails To Reach Agreement With Lenders

Author: Anusuya Lahiri | December 30, 2022 07:52am

• The chances of Toshiba Corp's (OTC:TOSYY) preferred bidder securing letters of commitment from banks are unlikely by year-end as disputes over lending terms persist after months of negotiations.
• A consortium led by Japan Industrial Partners Inc explored bank financing totaling ¥1.4 trillion ($10.6 billion) to take Toshiba private. However, negotiations have stalled over covenants and collateral, Bloomberg reports.
• JIP has also requested additional subordinated loans and other forms of mezzanine capital, with talks still ongoing.
• Banks, including Sumitomo Mitsui Banking Corp, had expected to sign off by end-December on ¥1.2 trillion in syndicated loans to help finance the buyout deal and another ¥200 billion to cover operational costs. No financing commitment is now possible until the new year.
• The buyout deal will likely be worth ¥2.2 trillion. JIP plans to decide on an offer price once it secures commitment letters. 
• Toshiba may hold a special committee meeting in mid-January to discuss JIP's offer.
• Japan's iconic brand, sullied by years of scandals and rising financing costs, had difficulty securing bank financing.
• The lenders may ask Toshiba to nominate one or more directors to its board.
• JIP secured another ¥1 trillion of financing from 20 potential co-investors to back its offer. The co-investors included Japanese companies like Rohm Co Ltd (OTC: ROHCY) and financial services firm Orix Corp (NYSE: IX).
• Price Action: TOSYY shares traded at $17.52 in the premarket on the last check Friday.

Posted In: IX ROHCY TOSYY