Toshiba to meet banks Tuesday, loan waiver expected: sources
Toshiba Corp plans to meet with creditor banks on Tuesday to
explain how it is addressing a massive charge that the Japanese company says it
must take on its U.S. nuclear business, three bankers briefed on the meeting
said.The bankers told Reuters on Friday they expect
creditors will agree not to call in loans while they discuss steps to aid the
laptops-to-engineering conglomerate.Toshiba officials could not immediately be reached for comment.
The bankers were not authorized to speak with media on the matter and so
declined to be identified.Syndicated loans could be endangered because credit-ratings
downgrades put Toshiba in violation of loan covenants, the bankers said, adding
that it was routine for them to grant a waiver in such a case to avoid a
funding crisis.Toshiba, still recovering from a $1.3 billion accounting
scandal in 2015, shocked investors again last month by announcing cost overruns
at a U.S. nuclear business bought in 2015 which could now mean a charge against
profit that could top $4 billion.Tuesday's "explanatory session" is also meant as a
show of support for Toshiba, as major creditors present a united front for the
borrower hit by a series of scandals and losses, one of the bankers said.The three bankers said they did not expect Toshiba to present
new, major information at the meeting, which they depicted as the start of the
process of working out rescue plans.Toshiba's top executives have said they will finalize the
loss on the nuclear business by mid-February, whereas sources have told Reuters
they expect Toshiba to give its bankers an idea of the scale of the problem
late this month.Toshiba chairman Shigenori Shiga said on Thursday the company
expects banks "will continue to provide support."One person close to the company has said the charge on the
nuclear business could run as high as 500 billion yen ($4.3 billion), compared
with shareholders' equity of 363 billion yen.The Japanese firm said cost overruns at U.S. power projects handled
by the CB&I Stone & Webster Inc business it acquired last December from
Chicago Bridge & Iron Co NV (CB&I) would be much greater than initially
expected, requiring the huge writedown.Toshiba's Westinghouse Electric Co LLC subsidiary is engaged
in a legal and accounting row with CB&I, which has argued in court that it
expected a relatively small payment from Westinghouse of only $161 million when
the deal closed on the understanding that the latter was taking on a challenged
business.(Reporting by Taiga Uranaka; Additional reporting by
Makiko Yamazaki; Editing by William Mallard and Christopher Cushing)
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