Hong Kong - Toshiba added a 400 billion yen ($3.3 billion) credit commitment with banks as it deals with fallout from an accounting scandal that led the Japanese industrial group to cut reported profit by more than $1.3 billion.
The agreement has a two-year term and brings the total loan facility to 762 billion yen, the company said on Wednesday in a statement. Toshiba didn’t disclose the cost of the new credit line and said it will supplement the liquidity of cash reserves.
The company has lost about $6 billion in market value since withdrawing its earnings forecast in May, when it announced an accounting probe that widened over months to include operations spanning infrastructure projects, personal computers, chipmaking and electronics. The Tokyo Stock Exchange has fined the company 91 million yen for the accounting problems, which regulators are still investigating.
“Toshiba needs to do some restructuring and probably will have to cut jobs,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “There is no immediate financing uncertainty for the company. The credit line is more for mid- to long-term concern.”
The shares gained 2.3 percent in Tokyo trading on Wednesday, bringing their decline this year to 41 percent, compared with a 0.2 percent drop in the benchmark Topix index.
Sumitomo Mitsui Banking, Mizuho Bank and Sumitomo Mitsui Trust Bank are providing the credit, Toshiba spokeswoman Midori Hara said by phone.
After acknowledging that it overstated earnings, Toshiba reduced net income by a total of 155.2 billion yen for the years ending March 2009 to March 2014, plus the first three quarters of the next year.
Toshiba shares were put on alert by the Tokyo Stock Exchange September 15 after it disclosed accounting irregularities. The company said in September it had set aside 8.4 billion yen to cover possible penalties.
Companies put on alert status are required to submit an improvement report to the exchange before being removed from the list.
BLOOMBERG