Kobe Steel proposes accepting short-term loans

November 13, 2017

Tokyo- Kobe Steel Ltd. has proposed accepting short-term loans as some creditors grew reluctant to provide long-term loans following the revelation of its product quality data falsification scandal, Jiji Press learned Monday.

Kobe Steel, which disclosed the data manipulation in early October, is ready to refinance some of its debts with short-term loans, such as those falling due in one year, although the company has so far preferred 10-year loans to stabilize its financing, informed sources said.

Kobe Steel's outstanding interest-bearing debts, mainly loans and corporate bonds, totaled 789.6 billion yen as of the end of March.

Of the amount, tens of billions of yen must be repaid to major and regional banks, insurers and other creditors by the end of next March. So the company is asking for refinancing, the sources said.

Kobe Steel's main creditor banks, such as Mizuho Bank, are prepared to continue supporting the company.

But some creditors have grown reluctant about long-term loans, saying they cannot make decisions on fresh loans until the full impact of the scandal on the company becomes clear, a financial industry source said.

Kobe Steel plans to cover the costs of expected product replacement and safety checks to companies affected by the scandal. As it is difficult to estimate the costs precisely, the company has withdrawn its group net profit projection for the current year ending in March 2018. Jiji Press