TOKYO _ The Development Bank of Japan extended a record 130 billion yen ($1.2 billion) to Nissan Motor Co. in May with a guarantee that the government will repay most of it in case of a default by the struggling automaker, sources familiar with the matter said Monday.
The guarantee is part of the 180 billion yen loan that Nissan received from the state-affiliated financial institution to weather the impact of the novel coronavirus pandemic. Under the arrangement, if the automaker defaults on the loan, the government will shoulder up to 80 percent, or about 100 billion yen, of the guaranteed portion, using taxpayers’ money.
The pandemic has dealt a further blow to sales at Nissan — already hurt by restructuring following the expansion pursued by former boss Carlos Ghosn, who was ousted amid allegations of financial misconduct.
The DBJ judged that the loan should be extended swiftly due to the potential impact from Nissan’s woes on local economies such as jobs at suppliers, according to the sources.
Nissan reported a net loss of 671.22 billion yen in the business year that ended in March, the first full-year red ink in 11 years.
In March, the government launched a scheme to extend loans to companies stung by the coronavirus outbreak via financial entities such as the DBJ.
While the DBJ provided about 1.8 trillion yen in loans to large and midsized companies as of the end of July, the loan to Nissan is the only one with a state guarantee, the sources said.
During the financial crisis following the collapse of Lehman Brothers, Japan Airlines Co. took out a loan of about 67 billion yen in 2009. It defaulted on the loan the following year when the carrier went bankrupt, causing the state to shoulder about 47 billion yen. _ Kyodo News