Toshiba goes cap-in-hand to banks for funding

Vendor is seeking a multi-billion Yen credit line to finance restructure plans

Reports have emerged that troubled Toshiba is set to approach its lenders for a new credit line by the end of January to finance large-scale restructuring.

According to a report on Reuters.com, a company representative put an end to speculation by saying Toshiba was ‘likely’ to approach its lenders for further funding, estimated to be in the region of ¥300 billion ($2.49bn).

It is believed the firm will turn to financial institutions such as Mizuho Bank and Sumitomo Mitsui Banking Corp.

The move follows a turbulent few mon ths for Toshiba after it was rocked by an accounting scandal where it was revealed it had overstated profits to the tune of ¥151.8bn over the past seven years.

It is also facing a huge ¥7.37bn ($59.9m) fine as a result of the scandal this summer, and its reigning CEO Hisao Tanaka resigned as a result.

The Reuters article also revealed that Moody’s had downgraded Toshiba’s debt rating to ‘junk’ status, and Tokyo Stock Exchange has placed the firm’s stocks in a special ‘watch’ category to see if its situation improves.

Both moves have hampered Toshiba’s ability to raise additional funding through debt or new share creation. Toshiba has already revealed that it would cut 6,800 electronics jobs, bringing the total axed to over 10,000.