TOKYO Main Japanese lenders of Toshiba Corp have agreed to not call in some of their loans early for now even as recent downgrades of the troubled firm's credit ratings violate some provisions in debt agreements, two people with direct knowledge of the matter said.
Toshiba on Jan. 10 requested the creditors, which included Japan's three mega banks, not to use provisions in the loan agreements to call in the loans early and to wait at least till the end of February for such a course of action.
Most of the lenders, including main banks Sumitomo Mitsui Banking Corp, Mizuho Bank Ltd and Bank of Tokyo Mitsubishi UFJ Ltd, have agreed to wait till at least end-February to call in the loans, the people said.
Toshiba met the lenders after it made warnings for a massive writedown from its nuclear business.
The lenders could have exercised their rights to call in the loans as Toshiba's credit ratings were downgraded to levels low enough for the lenders to do so, said the people.
In December, credit rating agencies such as S&P Global Ratings cut Toshiba's ratings after the writedown warning.
Toshiba had about 800 billion yen ($7.04 billion) in outstanding bank loans as of September, of which a chunk was syndicated loans that the group of main lenders agreed to not call in, the people said. Some regional banks are opposed to the deal, they said.
The people spoke on condition of anonymity because they are not permitted to speak to media.
(Reporting by Taro Fuse, Writing by Junko Fujita; Editing by Muralikumar Anantharaman)