A consortium led by Japan Industrial Partners (JIP) has formally submitted a proposal to Toshiba to take the troubled conglomerate private after securing commitments for loans worth ?1.4 trillion ($10.6 billion), sources have said.
Major Japanese banks including Sumitomo Mitsui Financial Group had issued letters of commitment to provide the loans to the JIP-led group, said two of the sources, who declined to be identified because the information has not been made public.
The ?1.4 trillion in loans included a commitment line of ?200 billion for working capital, the sources said.
The final buyout proposal would also include an equity portion of about ?1 trillion, they said. Whether that amount has been finalized is not clear, however.
The Nikkei business daily reported a final buyout proposal worth around ?2 trillion.
Sources have previously said the equity would be provided by a number of Japanese companies, including financial services group Orix, chipmaker Rohm and Japan Post Bank.
Toshiba said it would not make a comment immediately. JIP, a private equity firm, declined to comment.
Securing firm commitments from the banks was a major hurdle in the group¡¯s efforts to pull together a bid to buy Toshiba and take it private, according to the sources. The offer will now need to go to the conglomerate¡¯s board for approval.
Shares in Toshiba fell some 3% in Tokyo trade, potentially reflecting investor calculations that a rival bidder with a higher offer might now be less likely to emerge because the financing had been secured.
Toshiba named the JIP-led group as its preferred bidder in October. JIP was then asked by Toshiba to provide commitment letters from banks by Nov. 7, something it was unable to do.
The loan deal had taken a few months to finalize, causing a delay in the submission of the bid, as JIP, equity partners and the banks were working to resolve disagreements over post-buyout restructuring plans, the sources said.
One of the sources said the banks were asking for Toshiba to set up a committee involving investor representatives to monitor management after a buyout.
¡°This is still an ugly situation for me,¡± analyst Travis Lundy of Quiddity Advisors wrote in a note on Smartkarma. Questions remained about whether the special committee or the board would approve the offer, he said. Even if they did, shareholders might not.
Without sufficient support ¡°this could end in limbo,¡± he said.
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