Sumitomo Mitsui Banking Corp. and four other Japanese banks will lend a total of around 1.4 trillion yen ($10.6 billion) to a domestic investment fund to help it buy out Toshiba Corp., a source familiar with the matter said Thursday.
A document promising the combined loan will be sent next week to Japan Industrial Partners Inc., which has already secured an investment offer worth about 1 trillion yen from a group of more than 20 Japanese companies, including Orix Corp. The acquisition of the embattled conglomerate is expected to total between 2.2 trillion yen and 2.5 trillion yen.
Japan Industrial Partners leads a consortium that Toshiba has designated as the preferred bidder for the potential buyout. Its plan for rebuilding the conglomerate hinges on taking it private.
Among the five banks, SMBC and Mizuho Bank are expected to each contribute between 400 billion yen to 500 billion yen to the loan amount, Sumitomo Mitsui Trust Bank between 200 billion yen to 250 billion yen, MUFG Bank 150 billion yen and Aozora Bank around 50 billion yen, according to the source.
In addition to acquisition financing, the loans include a 200 billion yen line of credit to be used for working capital after Toshiba goes private. The banks are also considering sending personnel to support the company's management following its privatization.
In early October, Toshiba selected the consortium as the preferred bidder over Japan Investment Corp., a state-backed fund seeking to team up with Bain Capital for the buyout.
The consortium is also negotiating with the banks to invest in the company through preferred stock, which would grant them priority over common stockholders in terms of dividends and other benefits.
Toshiba has been struggling to recover from problems such as a window-dressing scandal and massive losses in its U.S. nuclear power business that surfaced in the 2010s.
