Goldman to get $180 million fees with Toshiba deal

Bloomberg

Goldman Sachs Group Inc. is poised to receive $180 million in fees for managing Toshiba Corp.’s emergency share sale, according to a person with knowledge of the matter.
The US firm is arranging the 600 billion yen private placement of new shares for loss-making Toshiba, which faces a March deadline from Tokyo’s exchange to reverse its negative equity or be delisted. About 60 funds, including David Einhorn’s Greenlight Capital and Daniel Loeb’s Third Point, are planning to invest, Toshiba said.
While Goldman Sachs’ fee as a percentage of the amount raised isn’t extraordinary—3.3 percent compared with about 4 percent for the average initial public offering in Japan— what’s unusual is that the firm is doing the deal on its own. In 10 other secondary share sales in Japan of at least this size over the past decade, a minimum of three banks split the fees,
according to data compiled
by Bloomberg.
The fee from the Toshiba sale is almost equivalent to the local Goldman Sachs unit’s entire profit for last year. Goldman Sachs approached Toshiba with a plan to raise money quickly from a relatively small group of investors, said the person, who asked not to be identified discussing private talks.
Toshiba, which is struggling to recover from multibillion-dollar losses at its US nuclear business, is raising the cash because it is uncertain whether the sale of its memory-chip unit will be completed in time to reverse its negative shareholders’ equity by the end of March. A public offering would have been tough to carry out because of questions over the company’s prospects as a going concern, Toshiba said.
Toshiba said it will sell 2.28 billion new shares at 262.8 yen apiece, about 10 percent lower than its closing price. It expects the transaction to be completed in early December. The shares have risen 3.8 percent since the announcement.
Goldman Sachs’ overseas affiliates met with potential investors to gauge demand, before selecting candidates and negotiating with them individually, Toshiba said. Those discussions took into consideration “our complicated and difficult situation,” the Tokyo-based company added.
Goldman Sachs also advised Toshiba on the $18 billion sale of its memory-chip unit to a consortium led by Bain Capital.