Toshiba asks creditors not to call in loans: sources
TOKYO (Reuters) - Toshiba Corp (6502.T: Quote) 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. Continued...