Toshiba, Sony Ink Loans from Japan-backed Fund

Toshiba Corp. and Sony Corp. will receive loans from a Japanese government-backed fund to help finance recent overseas acquisitions and cushion the blow of a soaring yen, Reuters wrote Thursday. The finance ministry set up a $100 billion fund in August to help firms that have been hurt by a stronger yen, Reuters wrote. Toshiba is getting $1 billion in loans via the Japan Bank for International Cooperation and other banks to help fund its purchase of Swiss-based meter maker Landis+Gyr.

(Reuters) – Toshiba Corp and Sony Corp will receive loans from a Japanese government-backed fund to help finance recent overseas acquisitions and cushion the blow of a soaring yen, the fund and the companies said on Thursday.

The yen’s strength has clobbered exporters’ earnings by eroding their overseas profits and sales competitiveness, but it also helped propel Japanese firms on a record $70 billion foreign acquisition spree last year.

The finance ministry set up a $100 billion fund in August to help firms that have been hurt by a stronger yen as well as those wanting to leverage the currency’s strength for M&A.

Toshiba said it would get $1 billion in loans via the Japan Bank for International Cooperation and other banks to help fund its purchase of Swiss-based meter maker Landis+Gyr, with JBIC’s portion totalling $600 million.

The electrical machinery maker bought unlisted Landis+Gyr last year in a deal valued at $2.3 billion including debt as part of plans to move into the international smart grid market.

Toshiba said in a statement that the Landis+Gyr deal had been financed by a short-term bridge loan raised from private banks, and that funding via the government would enable the firm to extend the loan period and reinforce its financial base while minimising the impact of the acquisition cost.

Toshiba also said that it was seeking to reduce currency risks by having the loan denominated in dollars.

Sony said it would receive $1.365 billion in loans through JBIC and other banks, with the state-backed bank’s portion at $819 million, to help finance its buyout of cellphone joint venture Sony Ericsson this month.

The consumer electronics giant bought out Swedish partner Ericsson for 1.05 billion euros ($1.5 billion), as it seeks to exploit its music and video content to help it catch smartphone leaders such as Apple Inc.

Before the announcement, Toshiba shares closed up 0.6 percent and Sony gained 0.5 percent, in line a 0.4 percent gain in the Nikkei. (Reporting by Miki Kayaoka, James Topham and Chris Gallagher; Editing by Edwina Gibbs)