Ailing Toshiba 'asks creditor banks for new loan'

Toshiba Corp will meet creditor banks to ask them to accept as collateral shares in its memory chip unit being split off and other businesses and not call in their loans, sources with direct knowledge of the matter say.VIDEO: REUTERS
Toshiba has put up most or even all of its prized chip unit to cope with this financial maelstrom.
Toshiba has put up most or even all of its prized chip unit to cope with this financial maelstrom.PHOTO: REUTERS

TOKYO • Toshiba asked creditor banks for a new loan and offered as collateral a stake in its memory chip unit that is being split off, sources said, underlining the firm's growing financial woes as it braces itself for a multibillion-dollar loss.

The TV-to-construction Japanese conglomerate expects to book a net loss of about US$9 billion (S$12.6 billion) for the year ended March, due to a write-down related to cost overruns at its United States nuclear unit Westinghouse that recently went bankrupt.

Toshiba has put up most or even all of its prized chip unit - the world's No. 2 producer of NAND chips - to cope with this financial maelstrom.

Yesterday, in a meeting with creditor banks, Toshiba asked for "a new lending facility", said sources with direct knowledge of the matter, who did not want to be named. It has previously requested creditors not to call in their loans.

The company did not say how much it was looking for in new loans, but one source said Toshiba may seek a new loan worth around 300 billion yen (S$3.77 billion).

A stake in the memory chip unit was offered as collateral both for a new loan and for existing loan commitments worth 680 billion yen provided by major lenders, sources said. Loan commitments are a promise to lend upon a borrower's request.

The conglomerate again offered shares in group companies such as Toshiba Tec and real estate properties as collateral for existing loans, said the sources, adding that it had asked creditors to give their nod by April 14.

A Toshiba spokesman confirmed the meeting, but declined to elaborate on the specifics of the discussion. The collateral offer is part of Toshiba's efforts to secure the support of its lenders, some of whom have become growingly frustrated with the conglomerate's financial troubles.

Toshiba shares ended down 9.4 per cent yesterday, following a 5.5 per cent drop the previous day.

REUTERS

A version of this article appeared in the print edition of The Straits Times on April 05, 2017, with the headline 'Ailing Toshiba 'asks creditor banks for new loan''. Print Edition | Subscribe