Photo/Illutration TEPCO President Tomoaki Kobayakawa speaks at a news conference in Tokyo’s Chiyoda Ward on Jan. 23. (Asahi Shimbun file photo)

About 10 financial institutions have agreed to grant a 400-billion-yen ($3 billion) emergency loan to Tokyo Electric Power Company Holdings Inc., whose business performance has worsened because of rising fuel prices and the weakened yen.

The group, which includes the Development Bank of Japan Inc., Sumitomo Mitsui Banking Corp., Mizuho Bank Ltd. and Nippon Life Insurance Co., will grant the massive loan to TEPCO as early as April, sources said.

According to the sources, the DBJ will loan about 90 billion yen, while others are expected to provide several tens of billions of yen.

The sources said TEPCO demanded the funds as it flashed red flags over its finances.

In January, TEPCO released an estimate that the company’s bottom line for the business year ending in March 2023 will be a deficit of 317 billion yen.

The company has struggled with electric power sales over the past year.

The debts of its sales subsidiary TEPCO Energy Partner Inc. temporarily exceeded its assets. Because of that, the subsidiary implemented a capital increase of 200 billion yen in October 2022. 

It also conducted an additional capital increase of 300 billion yen in January this year.

In both of the capital injections, TEPCO purchased new shares issued in a third-party allocation format.

The company is expected to significantly hike electricity rates to help improve its precarious situation, but it wants to improve its cash management with the funds it receives from the 10 financial establishments.

(This article was written by Taiki Koide and Shiki Iwasawa.)