TOKYO -- Nissan has requested a 500 billion-yen ($4.6 billion) commitment line from major lenders after sales were decimated by the coronavirus outbreak, two people with knowledge of the matter told Reuters on Thursday.
Like other automakers, Nissan has been hard hit as the pandemic crushes demand and disrupts production, but the Japanese automaker is more vulnerable than others.
Even before the outbreak, it was badly hit by a slump in profitability following decades of aggressive expansion and the scandal surrounding ousted leader Carlos Ghosn.
Nissan is requesting the funding given the possibility that the impact of the coronavirus on production and demand could continue for an extended period, one of the people said. The amount has not been finalized, the second person said.
The sources declined to be identified as they were not authorized to speak to the media.
A Nissan spokeswoman said the company had enough cash for its current business operations but the automaker was looking at various options to prepare for a possible crisis. She declined to comment further.
Nissan's new CEO Makoto Uchida has been tasked with delivering an aggressive recovery plan next month after the automaker's board deemed an earlier plan by his predecessor to cut 10 percent of the company's global work force as insufficient to ensure the company's survival.
In February, Nissan posted its first quarterly net loss in nearly a decade, and for the year ended March operating profit is expected to plunge 85 percent to 49 billion yen ($450 million), according to a Refinitiv Smart Estimate. That would be the lowest amount since a loss posted in the year ended March 2009 during the global financial crisis.
As of December, Nissan's automotive operations had negative free cash flow of 670.9 billion yen, an increase of nearly seven-fold from a year ago. Net cash for its automotive business stood at 847.5 billion yen, with Nissan having burned through nearly 40 percent of net cash over the year.
The Nikkei business daily reported earlier that Nissan is seeking the commitment line from Mizuho Financial and two other major commercial banking groups, as well as from the Development Bank of Japan.
Even automakers with strong financial positions have sought credit lines to weather the pandemic. Toyota last month sought a credit line totaling 1 trillion yen from local banks, sources told Reuters.
Toyota declined to comment.