JBIC Ready to Fund Mitsubishi Heavy, Siemens Bid for Alstom

Jun 19, 2014 3:07 am ET

(Updates with comment from analyst in fourth paragraph.)

June 19 (Bloomberg) -- The Japan Bank for International Cooperation is ready to support Mitsubishi Heavy Industries Ltd.’s joint bid with Siemens SA for France’s Alstom SA.

“The global restructuring of the heavy-electric machinery industry is taking place, and we have a mission to increase a number of globally flourishing Japanese companies,” Tadashi Maeda, the senior managing director of the bank, said in a June 17 interview. “We would certainly support them if we received a request” for funding assistance, Maeda said.

JBIC’s offer could ease the financing burden of Mitsubishi Heavy, which is seeking parts of Alstom’s energy business for 3.1 billion euros ($4.2 billion). The Tokyo-based company also plans to acquire as much as 10 percent of Alstom from Bouygues SA, a stake valued at about 900 million euros. Hideo Ikuno, a spokesman for Mitsubishi Heavy, declined to comment yesterday on the company’s funding plans for the bid.

“In an acquisition battle like this, having JBIC’s backing is advantageous,” Kazuma Ogino, a credit analyst at Nomura Securities Co., said by phone today. Mitsubishi Heavy could use the state-run lender’s low-interest assistance

Mitsubishi Heavy closed at 637 yen on the Tokyo Stock Exchange, up 1.4 percent, the biggest gain since June 11.

The state-run bank provided financing for trading firm Marubeni Corp.’s acquisition of Gavilon Holdings LLC and Mitsubishi Heavy’s joint venture with Vestas Wind System A/S.

Preferred Stock

Mitsubishi Heavy may raise funds through subordinated loans and preferred stock to avoid an increase in interest-bearing debt and a drop in credit ratings, Maeda said.

JBIC acquired preferred shares of Marubeni’s Gavilon Agriculture Holdings Co. unit for 60 billion yen ($587 million) after the Japanese trading company paid $2.7 billion for the U.S. grain and fertilizer business in July 2013. The bank had a similar agreement in April to acquire preferred shares of a Denmark-based unit of Mitsubishi Heavy valued at 132 million euros to help the company’s joint venture with Vestas.

Mitsubishi Heavy plans to acquire stakes in Alstom’s steam and nuclear turbine, power grid and hydro-electricity units, while its partner Siemens is offering 3.9 billion euros for the French company’s gas-turbine business, they said in a joint statement June 17.