TOKYO, Nov 29 (Reuters) - The operator of the crippled Fukushima nuclear plant is forecasting profits that fall short of minimum levels set by its banks, but the lenders are likely to ease their lending conditions to allow fresh financing for the embattled utility, people involved in the process said on Friday.
As part of a financial revival plan to be completed next month, Tokyo Electric Power Co (Tepco) will forecast recurring profit of 167.7 billion yen ($1.64 billion) for the business year starting next April, the sources told Reuters on condition of anonymity.
This falls far below the original forecast for the period, made under the current business plan, of a 261.9 billion yen profit and below the minimum 200 billion yen requirement under the lending covenants set by Tepco’s creditors, including Sumitomo Mitsui Financial Group and Mizuho Financial Group, the sources said.
When a borrower breaches a covenant, the lender can request repayment of the loan. But the sources said Tepco’s main banks are likely to go along in December with the company’s request for 500 billion yen in financing: 300 billion yen in new loans and 200 billion yen in loan rollovers.
That is because the banks largely agree with Tepco that the big cut in its profit forecast is mainly the result of a delay in the restart of Tepco’s undamaged Kashiwazaki Kariwa nuclear plant on the Japan Sea coast.
Tepco had previously forecast that plant, the world’s largest nuclear facility, would come back on line from April of this year. It now expects it to restart in July 2014.
All of Japan’s nuclear reactors have been shut down for safety reasons in the wake of the March 2011 earthquake and tsunami that wrecked Fukushima.
Representatives for Tepco, Mizuho and Sumitomo Mitsui declined to comment. ($1 = 102.2150 Japanese yen) (Additional reporting by Kentaro Hamada; Writing by William Mallard; Editing by Edmund Klamann)