Toshiba asks creditors not to call in loans: sources

Toshiba asks creditors not to call in loans: sources

Toshiba Corp (6502.T) met creditors on Tuesday and asked them not to use provisions in debt agreements to call in their loans early, giving the troubled company time to work out a turnaround plan, sources with knowledge of the matter said.It was the first such meeting since the conglomerate, which is still recovering from a $1.3 billion accounting scandal, shocked investors last month by announcing cost overruns at a U.S. nuclear business bought in 2015 which could now mean a charge against profit topping $4 billion.About 80 creditors, including regional banks and life insurance companies, attended the meeting, said the sources, who declined to be identified as they were not authorized to discuss the matter publicly.Toshiba executives briefed creditors about the background leading up to the massive writedown and the schedule of how it would work out the matter, the sources added.The laptops-to-engineering conglomerate confirmed the meeting, but did not provide any further details.Bankers said such a meeting was rather routine for a company in trouble and that, even though credit-rating downgrades after the writedown warning put Toshiba in violation of loan covenants, it was routine for them to grant waivers in such cases to avoid a funding crisis.Toshiba is expected to hold its next meeting with creditors in February, when the company is scheduled to have finalised writedown figures, the sources said.Toshiba's debts, including bonds, stood at about 1.2 trillion yen ($10.37 billion) as of the end of September.Toshiba has to rely heavily on lenders to weather the latest trouble. The Japanese firm, which saw its shares plunge 33 percent last month, remains on the Tokyo Stock Exchange's watchlist, effectively making it impossible for it to raise fresh capital through new share issues.Toshiba has started discussions on other ways to boost its depleted capital, including spinning off its crown-jewel chips business, other sources told Reuters."We must do all we can to improve our financial footing before we receive support from the banks," a senior Toshiba executive said.The spinoff of the chips unit - which generates most of Toshiba's operating profit - was discussed last year when the company conducted a major overhaul after the accounting scandal.The plan was scrapped as a $6 billion deal to sell its medical equipment unit to Canon Inc (7751.T) saved Toshiba from falling into negative net worth.(Reporting by Taiga Uranaka, Makiko Yamazaki and Taro Fuse; Editing by Himani Sarkar)

Toshiba to meet banks Tuesday, loan waiver expected: sources

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)