The $10.6 billion financing for the buyout of Toshiba by the preferred bidder is being finalised.
Two sources say that the preferred bidder for Toshiba (OTC: TOSYY) Corp. is finishing up a deal with Japanese lenders to get 1.4 trillion yen ($10.6 billion) in financing to pay for the acquisition. If the deal goes through, one of Japan’s best-known conglomerates would be taken private.
Private equity firm Japan Industrial Partners (JIP) should get commitments from banks by the end of this month, according to people who know about the situation but did not want to be named because the talks are private.
They said that 200 billion yen is working capital and is part of the 1.4 trillion yen total.
Three sources say that the main banking arms of Mizuho Financial Group, Sumitomo Mitsui (NYSE:SMFG) Financial Group, and Sumitomo Mitsui Trust Holdings Inc. will lend more than 1 trillion yen.
They also said that the core bank unit of the biggest financial group in Japan, Mitsubishi UFJ (NYSE: MUFG) Financial Group, and Aozora Bank Ltd. are taking part.
Related: The group led by Japan Industrial Partners is likely to miss the deadline for borrowing money for the Toshiba buyout – Kyodo.
Representatives from all five banks refused to say anything. JIP was not available to talk right away.
Toshiba, which has businesses in nuclear power and defence technology and owns 40.6% of a company that makes memory chips, didn’t want to say anything. It told shareholders in a letter last week that it wanted to reach an agreement with possible partners as soon as possible.
The deal is expected to cost at least 2.2 trillion yen, and Reuters has said that Japanese companies like Orix (NYSE:IX) Corp., chipmaker Rohm Co. Ltd., and Japan Post Bank are likely to join JIP in its bid.
Two sources said that the final price could change if the market changes.
In October, Toshiba chose a group led by JIP as its best offer for the buyout process. The private equity firm was then asked by Toshiba to get commitment letters from banks by November 7. It was unable to do this.
But sources have said that by the beginning of this month, JIP was closer to getting the support of banks after it proposed concrete steps for restructuring.
Investors will pay close attention to how a Toshiba special committee and its board evaluate JIP’s plan to fix the troubled conglomerate once the bid is finalised.
($1 = 132.7200 yen)