AlwaysFree: Toshiba Sale Faces Delay as Banks Wary on Financing, Sources Say

• Japanese lenders reluctant to commit without buyout detail
• Borrowing costs leave banks less willing to take M&A risk

According to Bloomberg’s article published on October 17, 2022, a takeover of Toshiba Corp., which could be the biggest buyout in Asia this year, is at risk of slipping behind schedule as the bidding groups run into obstacles securing financing commitments from banks.

The consortium led by Japan Industrial Partners Inc. and a rival group led by state-backed investment fund Japan Investment Corp. will find it hard to meet a Nov. 7 deadline, set by the iconic conglomerate, to line up commitment letters, according to people familiar with the matter. Some global banks have turned cautious over backing large buyouts like Toshiba amid rising borrowing costs in the US and elsewhere, the people said. Inflation has even increased in Japan, though the central bank is an outlier in maintaining a loose monetary policy.

Shares in Toshiba fell as much as 3% in Tokyo on Monday following the Bloomberg News report. The company has a market value of about $16 billion.

Four major Japanese lenders have only submitted indications of their interest in providing financing to the groups, the people said, asking not to be identified as the information is private. The banks cannot make binding commitments as neither JIP nor JIC have finalized details such as deciding on the lineup of their equity partners, the people added.

The logjam illustrates the broader challenges of putting together an offer for a national icon like Toshiba. JIP’s bid has been named as Toshiba’s preferred bidder, Bloomberg News has reported. Both groups are still holding talks with prospective co-investors to help fund the deal, the people said. 

Considerations are still ongoing and there’s no certainty that talks will lead to any transaction, the people said. Toshiba could still decide to explore certain asset sales instead of a full sale of the business, they said.

Representatives for JIP and JIP declined to comment. Midori Hara, a Toshiba spokesperson, declined to comment on candidates including co-investors, saying to do so could undermine a fair process.

JIP is in talks to form a partnership with domestic companies including Orix Corp. and Chubu Electric Power Co. as well as global investment firms such as Baring Private Equity Asia and CVC Capital Partners, Bloomberg News has reported.

Investors including Bain Capital and MBK Partners have discussed being involved in JIC’s rival bid group, people familiar with the matter have said.

The Japanese conglomerate has solicited proposals to shape its future strategy, including potential buyout bids. Such a deal could be private equity’s largest ever in Japan.

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