JIP-led group secures $10.6 billion of loans for Toshiba buyout

By Makiko Yamazaki and Ritsuko Shimizu

TOKYO (Reuters) -A Japan Industrial Partners-led consortium has secured commitments for 1.4 trillion yen ($10.63 billion) of loans to finance the buyout of Toshiba (OTC:) Corp, two sources said, removing a major hurdle in the group’s long effort to take the troubled conglomerate private.

Major Japanese banks, including Sumitomo Mitsui (NYSE:) Financial Group, have issued letters of commitment to provide the loans to the JIP-led group, said the sources, who declined to be identified because the information has not been made public.

The final buyout proposal would include an equity portion of about 1 trillion yen to be provided by a number of Japanese companies including financial services group Orix (NYSE:) Corp, chipmaker Rohm Co Ltd and Japan Post Bank, the sources said.

The business daily reported a final buyout proposal worth around 2 trillion yen had been submitted.

Toshiba said it would not make a comment immediately. JIP declined to comment.

Securing firm commitments from the banks had appeared to be 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 of Toshiba fell some 3% in Tokyo trade, potentially reflecting investor calculations that a rival bidder – with a higher offer – may be now less likely to emerge because the financing was secured.

Sources said the 1.4 trillion yen of loans included a commitment line of 200 billion yen for working capital.

Toshiba named the JIP-led group as its preferred bidder in October. The private equity firm was then asked by Toshiba to provide commitment letters from banks by Nov. 7, something it was unable to secure by that date.

($1 = 131.7100 yen)