Photo/Illutration The logo of Toshiba Corp. seen in Kawasaki, Kanagawa Prefecture (Asahi Shimbun file photo)

A major investment fund submitted a buyout proposal to Toshiba Corp. on Feb. 9 after securing 1.4 trillion yen ($10.6 billion) in loans from five major Japanese banks. 

The troubled conglomerate acknowledged in the afternoon that it had received the restructuring proposal from Japan Industrial Partners Inc.

“We will act to maximize the interests of our shareholders and other stakeholders,” Toshiba said in a statement. 

Sources said the proposal suggests that JIP acquires Toshiba for 2 trillion yen and takes the company private.

More than a dozen Japanese companies, including Orix Corp., will invest a total of 1 trillion yen, the sources said.

Sumitomo Mitsui Banking Corp., Mizuho Bank Ltd., Sumitomo Mitsui Trust Bank Ltd., MUFG Bank Ltd. and Aozora Bank Ltd. plan to provide loans of 1.2 trillion yen to JIP and establish a commitment line of 200 billion yen for working capital.

JIP had initially expected to secure bank financing by the end of last year. But it was delayed since JIP had failed to reach an agreement with banks on financial conditions for Toshiba and on members of Toshiba’s management team after the buyout.

In the end, it was apparently agreed that both the banks and shareholding companies will send their executives to manage Toshiba.

Another source said that some factors remain uncertain. For example, some of the companies have not yet completed their internal procedures for investment.

Securing firm commitments from the banks was a major obstacle to putting together a bid to buy Toshiba. But the focus now turns to whether Toshiba’s board will accept the offer.

A special committee consisting of outside board directors, including two from foreign investment funds that actively express their views on the management aspect, will examine the proposal.

The key will be how Toshiba views the buyout offer, which is estimated to be valued at around 5,000 yen per share.

“Toshiba’s share prices have been rising in response to growing speculation of a takeover,” said Kenichiro Suzuki of IB Consulting, an expert on corporate acquisitions. “But the premium (added value) for acquisitions is high compared to the previous share prices. 

“Since there are no competitors other than JIP, the foreign investment funds side could accept the proposal,” he said.

(This article was written by Ayumi Sugiyama and Taiki Koide.)

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