Nissan Seeks to Raise $7 Billion With UK Government Backing

Yahoo

5 days ago

(Bloomberg) -- Nissan Motor Co., facing a huge loan repayment wall next year, is seeking to raise more than ¥1 trillion ($7 billion) from debt and asset sales to keep operations on track, according to internal documents seen by Bloomberg News.
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The struggling Japanese automaker plans to issue as much as ¥630 billion in convertible securities and bonds, including high-yielding US dollar and euro notes, the documents show. Nissan also plans to take out a £1 billion ($1.4 billion) syndicated loan, guaranteed by UK Export Finance. Nissan operates Britain's largest automaking hub, in Sunderland.
In addition, Nissan is seeking to sell part of the 15% stake it owns in Renault SA and the equity interest it has in battery maker AESC Group Ltd., as well as plants in South Africa and Mexico. Sale-and-lease-back plans for its Yokohama headquarters, plus properties it owns in the US, are also on the cards.
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The carmaker's shares in Tokyo jumped as much as 4.6%, their biggest intraday rise in more than a week, before closing down 0.3%. With Nissan permitted to sell only a third of its Renault stake, that could potentially raise around 690 million euros ($781 million) at current prices.
The aggressive and wide-ranging fundraising plans underscore Nissan's rapidly deteriorating financial and operational position, despite efforts by newly appointed Chief Executive Officer Ivan Espinosa to turn the company around. Espinosa presented the options to the board earlier this month, people familiar with the matter said, with the goal of securing some funding within the quarter that will end June 30.
The funding proposal doesn't appear to have been approved by Nissan's board yet, leaving it unclear whether it will happen, the people said, declining to be identified discussing details that are private. The proposal is also slated to include the rollover of some debt.
Representatives for Nissan didn't immediately respond to a request for comment. A spokesperson at UK Export Finance said in a statement that the organization does 'not comment on speculation around specific transactions.'
The funding urgency stems from internal forecasts predicting that Nissan's car manufacturing operations will see excess cash dwindle to close to zero by the end of March 2026, the documents show. The projections are based on US tariffs remaining in place and no further cash injections.
Nissan has sufficient capital of about ¥2.2 trillion in cash on hand and credit to last the next 12 to 18 months, Espinosa told Bloomberg TV earlier this month. 'We have a solid footing in terms of liquidity,' he said.
Given the uncertainty over tariffs and the state of its business, Nissan didn't issue a profit outlook for the current fiscal year, saying only it expects to post sales of ¥12.5 trillion. Along with its group firms, Nissan is facing around $5.6 billion of debt due next year, the most in Bloomberg-compiled data going back to 1996.
The internal documents viewed by Bloomberg also show that Nissan expects to see an operating loss of as much as ¥450 billion for the 12 months through March 2026 if higher tariffs remain in place. Without tariffs, the loss is forecast to be ¥300 billion. Either would mark the biggest operating deficit in the company's history.
Espinosa announced plans earlier this month to eliminate 20,000 jobs and close seven of Nissan's 17 plants by March 2028 after the company reported a ¥671 billion net loss for most recent fiscal year. The measures follow the collapse of talks earlier this year to join forces with Honda Motor Co. Those discussions ended in part due to disagreements about Nissan's willingness to make deeper cuts to production and personnel.
Nissan will likely close two factories in Japan as part of its restructuring and cost cutting process, people familiar with the matter said. Those targeted facilities are in Oppama and Hiratsuka, near Yokohama, and represent about 30% of domestic production.
Various financial institutions have been lined up for the £1 billion in loans backed by UK Export Finance, which mainly supports British exporters. It will comprise one of the largest components of Nissan's planned fundraising. In the past, the agency has helped to secure financing for high-speed rail construction in Turkey and infrastructure in Angola.
In Sunderland, Nissan has committed to boost electric vehicle production with a £2 billion investment. The British government has hailed the project as a vote of confidence in the country's automotive industry after years of uncertainty following Brexit.
Earlier this month, AESC announced plans to push ahead with a second battery factory in Sunderland after getting financing support from UK Export Finance and the National Wealth Fund, as well as other investors. Formerly a Nissan affiliate, AESC is based in Japan and majority owned by Chinese interests.
The recent UK-US trade deal could offer some reprieve to Nissan if it's able to export cars from Sunderland, which has an annual capacity of 500,000 units, at a lower tariff rate. US President Donald Trump's 25% tax on all vehicles imported into the US, which took effect in April, has cast a shadow over most global automakers. It would be costly for all of Japan's export-heavy carmakers, and especially painful for Nissan given its precarious financial state.
Nissan has said it has ¥2.1 trillion in unused credit lines in addition to its own liquid reserves, but cash flow turned negative in its latest fiscal year and ratings agencies have cut the company's creditworthiness status to junk.
--With assistance from Joe Mayes.
(Updates with Nissan's Renault stake value in 4th paragraph.)
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