TOKYO (Reuters) -Sumitomo Mitsui Financial Group, Mitsubishi UFJ (NYSE:MUFG) Financial Group and Mizuho Financial Group plan to lend Nippon Steel a combined $16 billion for its planned acquisition of U.S. Steel, the Japanese steelmaker said on Tuesday.
"We have received a commitment letter for a combined $16 billion in loans from the three Japanese megabanks on condition that the acquisition goes through," a Nippon Steel spokesperson said.
The world's fourth-largest steelmaker's $14.9 billion deal to buy its U.S. rival has drawn criticism from some of Democratic and Republican lawmakers and the powerful United Steelworkers union.
The White House has also promised "serious scrutiny" of the deal given the company's role in U.S. steel production, which the government regards as critical to national security.
Among the total lending, Sumitomo Mitsui (NYSE:SMFG) plans to loan $6.5 billion, Mitsubishi UFJ $5.5 billion, and Mizuho $4 billion, according to a source familiar with the matter.
Earlier on Tuesday, Bloomberg reported that the loans are to be paid back in a year and that Nippon Steel is expected to issue bonds and new shares to raise money after the acquisition is complete.
Nippon Steel declined to comment on the possible issuance of bonds and new shares.
All three banks said they do not comment on individual deals.