Nissan Aims to Raise $7 Bln Ahead of Loan Repayment Wall

Bloomberg

7 days ago

00:00
What do we know about Nissan's planning? What? Nissan is planning to sell, issue and borrow here? Yeah, Essentially it's a combination of new financing as well as rolling over some existing obligations, namely that debt wall you just mentioned. But really, you know, it speaks to the need for the car maker to start raising some cash to keep its operations going, especially because, you know, we see the sort of excess cash position within the core automotive business really projected to shrink and almost dwindle to zero over the coming fiscal year, which ends in March of 2026. Well, just remind us why all of this is necessary. How bleak is the picture at Nissan right now? Yeah. I mean, it depends on how far back you want to go. We can go back to 2018 with the arrest of former chairman Carlos Ghosn. But really, you know, the issues that we're reporting about today stem from essentially a lack of products, fresh products to sell into Nissan's largest markets of North America, Japan and China, as well as the lack of hybrids, which are doing very well in the North American market. And then, of course, a lot of, you know, sort of management turmoil and missteps have led at least over the past few years to the current situation where we see, you know, Nissan going out and getting bond issuances in order. It's got convertibles. It's going to sell off some assets, including stakes in Renault and ASEC, battery maker, as well as sale and leaseback some of its real estate holdings, including its headquarters in Yokohama. And that is a very interesting syndicated loan from a group of banks that's going to be backed by U.K. export finance. That's really a new element that we haven't seen here before. And of course, part of the reason for that is Nissan's got such an important role in U.K. manufacturing. The biggest automaking hub in the UK is in Sunderland. I wonder how much the UK US trade deal could reverse some of this plan and actually help Nissan. Yeah, I mean, that's sort of still up in the air. Obviously, there are details to be known about the UK U.S. trade deal. But I think on paper, you know, the sort of assumption is that if you build parts and cars in the U.K. for export to the US, you know, Nissan may be able to avert some of the steep tariffs that are going to be imposed on cars made in Japan, namely 25%. Again, a lot of this is still up in the air, but at least, you know, this does kind of keep that option open. Of course, Nissan is also looking to shrink the number of its factories and to about ten from 17. Some of them are probably going to be right here in Japan. But, you know, the fate of the Sunderland factory. Well, you know, you can kind of read into it what you will.