Bloomberg News

Tepco Said to Be in Talks for 1.07 Trillion Yen of Borrowing

February 24, 2012

(Adds analyst’s quote in fourth paragraph.)

Feb. 23 (Bloomberg) -- Tokyo Electric Power Co. is in talks with banks and life insurers for loans and a commitment line totaling 1.07 trillion yen ($13.3 billion), according to three people with direct knowledge of the matter.

The financing to Tepco, as the company is known, would include a 500 billion yen term loan, a commitment line of 400 billion yen and a 170 billion yen portion to refinance an existing facility, according to the people, who asked not to be identified because the details are private.

Almost one year after the Fukushima disaster, the worst nuclear crisis since Chernobyl, forced the evacuation of 160,000 people, Tepco is still negotiating with banks and the government to save itself from bankruptcy and ensure it meets compensation claims. A government panel has said Tepco may have to pay damages of 4.5 trillion yen ($57.8 billion) by March next year.

“Saving one of the world’s largest private utilities will require a massive commitment but it can’t be helped because Tepco is too big to fail,” said Hirofumi Kawachi, an energy analyst at Tokyo-based Mizuho Investors Securities Co.

Tepco will present a proposal to the creditors by March 2 outlining steps the utility will take to return to profit after the disaster, the people said. The document being drafted by Tepco and the government’s Nuclear Damage Liability Facilitation Fund will detail steps to restart one of its atomic plants, raise electricity charges and sell bonds, according to the people. Lenders will decide whether to approve the loan package after reviewing the plan, the people said.

Business Plan

The company is in talks with financial institutions for loans, according to Naoyuki Matsumoto, a Tepco spokesman. He declined to comment on details. The utility plans to outline its business plan by the end of March, as planned, Matsumoto said in Tokyo.

The loans are contingent on the company agreeing to increase electricity rates, accept a capital injection from the fund and restart some of its nuclear reactors.

Banks and life insurance companies are also in talks to loan another 1 trillion yen to the damage liability fund, which would use the money to buy shares in the utility and get voting rights.

The utility is now dependent on aid from the Nuclear Damages Facilitation Fund to stay in business. Tepco received 2 trillion yen in emergency loans last year related to the Fukushima disaster.

Tepco’s lenders include the Development Bank of Japan, Sumitomo Mitsui Banking Corp., Bank of Tokyo-Mitsubishi UFJ Ltd., Mizuho Corporate Bank Ltd., four insurance companies, four trust banks and about 30 regional Japanese banks, the people said.

--With assistance from Yusuke Miyazawa and Tsuyoshi Inajima in Tokyo. Editors: Beth Thomas, Teo Chian Wei

To contact the reporter on this story: Emi Urabe ???? in Tokyo at eurabe@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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