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Kobe Steel seeks loan, shareholder offers support after data scandal

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TOKYO: Embattled Kobe Steel Ltd is seeking 50 billion yen ($440 million) in loans from banks, a banking source said on Monday, while a shareholder said it was ready to offer assistance as the company grapples with a scandal over falsified product specifications.


Japan’s third-largest steelmaker also pulled its forecast for a first annual profit in three years while it deals with the financial impact of one of Japan’s biggest corporate scandals.


Kobe Steel is losing customers and said on Friday it had the government-sanctioned seal of quality revoked on some of its products.


The steelmaker’s admission earlier this month that it had found widespread tampering in specifications has sent companies in global supply chains scrambling to check whether the safety or performance of their products has been compromised.


While no safety issues have been identified, Kobe Steel’s parts and materials are used across the world in cars, trains, airplanes and other equipment.


The company, which has said it cannot fully quantify the impact on its finances from the scandal, is seeking loans from Mizuho Bank and other lenders, a banker said.


The Nikkei business daily reported earlier that Mizuho Bank, Sumitomo Mitsui Banking and Bank of Tokyo-Mitsubishi UFJ are considering loans to the steelmaker.


Kobe Steel Managing Executive Officer Kazuaki Kawahara confirmed at an earnings briefing later on Monday that the company was in loan talks with banks but did not provide details.


Executive Vice-President Naoto Umehara said that Kobe Steel will continue generating cash on its own to cover expenses from the data falsification as well as for capital investment.


He said the misconduct would likely reduce its recurring profit by 10 billion yen in the full 2017/18 financial year.


The company however cut its forecast for recurring profit in the year by 5 billion yen to 50 billion yen because of better than expected earnings in the first half.


Japan’s biggest steelmaker, Nippon Steel & Sumitomo Metal Corp said on Monday it will provide support to its smaller rival if requested. — AFP


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