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

The chances of Toshiba Corp's 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 ROHCY and financial services firm Orix Corp IX.
Price Action: TOSYY shares traded at $17.52 in the premarket on the last check Friday.