Five banks holding a ¥42.5bn syndicated loan to Tsubaki Nakashima agreed on July 31 not to call in the debt, after the precision-ball and bearing-component maker breached the loan's financial covenants for the second consecutive half-year period. The waiver matters more than the flattering headline in the company's first-half earnings, where operating profit rose 66.7% largely because of a one-off asset sale rather than a genuine recovery in the underlying business.
| Feature | Detail |
|---|---|
| Loan balance (June 30, 2026) | ¥42.5bn |
| Lenders | 2 city banks, 3 regional banks (agent: MUFG Bank) |
| Signed | November 1, 2017 |
| Covenants breached | Consolidated net assets below 75% of the level six months earlier; trailing 12-month consolidated operating loss |
| Breach date | June 30, 2026 |
| Waiver date | July 31, 2026 |
| Maturity | November 30, 2026 |
The loan, agented by MUFG Bank and signed in November 2017, is held by two city banks and three regional banks and carries no collateral. Its covenants require Tsubaki Nakashima to keep consolidated net assets at or above 75% of the level six months earlier, and to avoid a trailing 12-month consolidated operating loss. As of June 30, the company had failed both of those tests, though it stayed within a separate, unconsolidated net-asset covenant on the same facility. The trigger was the ¥22.3bn full-year operating loss the group posted for the year to December 2025. All five lenders confirmed in writing that they will not exercise their right to demand early repayment, and the company says it has started refinancing talks ahead of the loan's November 30 maturity.
Group revenue for the six months to June rose 2.2% year-on-year to ¥36.9bn, and reported operating profit jumped 66.7% to ¥1.32bn. Most of that gain came from a ¥1.05bn gain on selling idle land at US subsidiary TN Georgia in February, part of a restructuring drive that also closed the company's Erwin, Tennessee plant this year. By the company's own accounting, stripping out the land sale would have left six-month operating profit at roughly ¥280 million, not ¥1.32bn. The interim net loss attributable to shareholders narrowed to ¥124mn from ¥965mn a year earlier, still a loss.
The balance sheet still carries the scars of the earlier breach. At the end of last fiscal year, ¥60.2bn of borrowings had been classified as current liabilities because of covenant breaches, including debt not due for more than a year. With waivers now in hand, ¥18.7bn of that has moved back to non-current status: short-term bonds and loans fell to ¥54.5bn at mid-year from ¥72.0bn six months earlier, while long-term bonds and loans rose to ¥39.6bn from ¥20.8bn. Tsubaki Nakashima left its full-year guidance unchanged, at ¥70bn in revenue and ¥2.5bn in operating profit, and it is not paying a dividend this year.