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Renesas Banks Said to Plan to Relax Terms on Emergency Loans

Renesas, a supplier to Apple Inc. and Nintendo Co., is cutting jobs and considering closing or selling factories to recover from losses as demand for its microchips declines. Photographer: Kiyoshi Ota/Bloomberg
Renesas, a supplier to Apple Inc. and Nintendo Co., is cutting jobs and considering closing or selling factories to recover from losses as demand for its microchips declines. Photographer: Kiyoshi Ota/Bloomberg

Dec. 6 (Bloomberg) -- Mizuho Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. are planning to relax terms on emergency loans to chipmaker Renesas Electronics Corp., three bank officials with knowledge of the matter said.

The banks will decide as early as this week to extend repayment periods and cut interest rates, the people said, asking not to be named because talks are confidential. Lenders are considering extending the five-year repayment period to seven years and reducing rates to below 1.5 percent from about 1.8 percent, one of the people said.

Renesas, a supplier to Apple Inc. and Nintendo Co., is cutting jobs and considering closing or selling factories to recover from losses as demand for its microchips declines. State-backed Innovation Network Corp. of Japan is close to a reaching an agreement with Renesas shareholders to take a two-thirds stake in the chipmaker to help restructure the company, a person with knowledge of the talks said Nov. 26.

Yuji Okumura, a Tokyo-based spokesman for Mitsubishi UFJ, and Masako Shiono, a spokeswoman for Mizuho, declined to comment on the term negotiations. Makie Uehara, a spokeswoman for Renesas, declined to comment.

Kawasaki, Japan-based Renesas rose 1 percent to 292 yen as of 2:35 p.m. in Tokyo trading. The shares have slumped 38 percent this year, compared with the benchmark Topix Index’s 8.2 percent gain.

Mitsubishi UFJ rose 1.3 percent and Mizuho shares climbed 1.5 percent.

Emergency Loans

Renesas said Sept. 28 it clinched loan contracts for about 200 billion yen ($2.4 billion) with its lenders, which include Sumitomo Mitsui Trust Holdings Inc.

INCJ, which may announce an investment of more than 180 billion yen in Renesas, has been negotiating with the banks to ease loan terms for the company, a person with knowledge of the talks said Nov. 30.

Renesas has lost 177.6 billion yen since its formation in 2010 by the merger of money-losing chipmakers Renesas Technology Corp., a venture between Hitachi and Mitsubishi Electric Corp., and NEC Electronics Corp. Renesas’s net loss may widen to 150 billion yen for the year ending March 31 from 62.6 billion yen a year earlier, the company predicted Oct. 29.

To contact the reporters on this story: Emi Urabe in Tokyo at eurabe@bloomberg.net; Shigeru Sato in Tokyo at ssato10@bloomberg.net; Shingo Kawamoto in Tokyo at skawamoto2@bloomberg.net

To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net; Shelley Smith at ssmith118@bloomberg.net

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