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Kioxia Holdings’ lenders intend to file a commitment letter in October for the refinancing of ¥2T ($14B) in loans to assist in funding the merger with Western Digital’s (NASDAQ:WDC) flash memory business which is still under discussion, Bloomberg News reported citing people with knowledge of the matter.
The letter being prepared is from banks including Sumitomo Mitsui Financial Group (SMFG) (OTCPK:SMFNF), Mizuho Financial Group (MFG) (OTCPK:MZHOF) and Mitsubishi UFJ Financial Group (MUFG) (OTCPK:MBFJF), the report added.
Of the ¥2T refinancing, ¥400B may be funded via loan commitments. For the ¥1.6T loan, ¥1.3T could be equally divided among the three megabanks, while the Development Bank of Japan will provide the remaining ¥300B loan.
A part of the loan will be used to pay special dividends to Kioxia’s existing shareholders Bain Capital currently owns about 56.24% of Kioxia, while Toshiba (OTCPK:TOSBF) (OTCPK:TOSYY) owns about 40.64%, according to the report.
Under the merger deal, Western Digital would hold about 50.5% of the combined holding company, while the remaining 49.5% will be owned by the chip maker Kioxia. WDC’s hard drive business is expected to remain separate and is not part of the deal, the report noted.
The companies tried to reach a merger by August but discussions lingered. If the deal does not happen, the banks will not proceed with the loan under discussion, the report noted.
One reason complicating the talks is the planned buyout of Toshiba. A consortium led by investment fund Japan Industrial Partners started a tender offer in August which ends on Sept. 20. Toshiba said in August that it would launch a $14B tender offer to take the company private.