Tokyo Electric Power Co., operator of the stricken Fukushima Dai-Ichi nuclear plant, is in talks with Japan’s three biggest banks for loans totaling as much as 2 trillion yen ($25 billion), according to two people with knowledge of the matter.
Mitsubishi UFJ Financial Group Inc. (8306), Sumitomo Mitsui Financial Group Inc. (8316) and Mizuho Financial Group Inc. (8411) are in final negotiations with the utility, the people said, declining to be identified before an announcement. Shinya Matsumoto, a spokesman for Mitsubishi UFJ in Tokyo, said the bank is “positively considering” a loan, though nothing is decided.
Tokyo Electric, whose shares have plunged 51 since a March 11 earthquake and tsunami damaged the nuclear station north of the capital, aims to arrange the credit this month, the people said. Radiation leaked from the plant has contaminated vegetables, milk and the water supply, and the company has implemented rolling blackouts in Tokyo to conserve power.
“Bank support and government support is anticipated,” Kenji Okamoto, an analyst at Moody’s Investors Service, said in an interview. “They’re such a huge, important company providing energy for Tokyo.”
Sumitomo Trust & Banking Co. and Chuo Mitsui Trust Holdings Inc. (8309) are also considering offering credit to Tokyo Electric, the people said. Tokyo Electric approached each of the banks separately for the loans, the people said, declining to elaborate on the terms of the financing. The total amount would be between 1 trillion yen and 2 trillion yen, they said. Kyodo News reported the discussions earlier today.
Borrowing Needs Rising
“While we have enough liquidity in hand, we expect our borrowing needs to increase next fiscal year and will raise funds as needed,” Hajime Motojuku, a spokesman for Tokyo Electric, said by phone. He declined to comment on whether the company is speaking with banks and how much it needs to raise.
Sumitomo Mitsui spokeswoman Chika Togawa declined to comment on individual transactions, while saying the bank will support Tokyo Electric because the utility provides “vital infrastructure.” Masako Shiono, a spokeswoman for Mizuho, said she couldn’t comment on specific transactions.
Workers are trying to prevent a meltdown at the Fukushima plant after losing electricity that drove reactor cooling systems following the 9.0-magnitude earthquake, the country’s worst in recorded history, and ensuing tsunami.
Tokyo Electric faces a maximum 120 billion yen in costs to cover third-party damages resulting from the accident, according to Japanese law. Chief Cabinet Secretary Yukio Edano said this week that the government will aid farmers if Tokyo Electric is unable to bear the costs.
Tokyo Electric shares fell 4.5 percent today, halting a two-day rally, after authorities in the capital said its tap water may have iodine levels that are unsafe for infants.
The cost of insuring the company’s debt against default has surged six times since the earthquake on concern it will be harder to service net borrowings, CMA data show. The company has debt of 4.96 trillion yen, according to data compiled by Bloomberg.
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