Risk of going concern resulting from substantial impairment losses and breaches of financial covenants
First written in FY2020-Q2. 3 of 8 entries say "Mitigated", first in FY2021-Q3. Latest entry: FY2026.
The whole theme swung hardest in 2022: 2 of 6 companies on the "Worse" side.
3 other companies' latest entry also says "Mitigated".
- FY2026MitigatedAnnual report
「Non-current liabilities decreased by ¥5,914 million, mainly because of the repayment of ¥6,186 million in long-term borrowings and a ¥675 million decrease in the provision for litigation losses.」
Non-current liabilities declined as borrowings were repaid, while net assets and the equity ratio also improved. Although the financial covenants remain in place, the financial base is improving from the previous fiscal year. - FY2022-Q3RestatedAnnual report
「Accordingly, the company determined that, during the third-quarter cumulative period, the events or circumstances that could raise substantial doubt about the going concern assumption had been resolved.」
Although the financial-covenant violation continued, the company reconfirmed its determination that material events related to the going concern assumption had been resolved, citing demand recovery, cost-structure reforms, waivers by financial institutions and cash and deposits exceeding borrowings. - FY2022-Q1MitigatedAnnual report
「As of the end of the current quarter, the company remained in violation of the requirement stipulated in the financial covenants to maintain consolidated net assets at or above 75% of the consolidated net assets at the end of the fiscal year ended March 2018. At the same time, although risks including the impact of the spread of COVID-19 and soaring raw-material prices remained during the current consolidated fiscal year, the operating environment has been recovering as demand has recovered and one-time costs associated with blast-furnace repairs have been eliminated. In addition, as a result of cost-structure reforms, including consolidating North American locations, soliciting voluntary retirements in Japan and reducing personnel at overseas locations, operating profit was positive in the first-quarter cumulative period, and the company expects to secure positive operating profit for the full current consolidated fiscal year. In terms of funding, the company obtained the financial institutions' consent in June 2021 to waive the rights they acquired under the contracts against the company as borrower upon the occurrence of an event giving rise to a loss of the benefit of time. In addition to the recovery in business performance, proceeds from the sale of cross-held shares and idle real estate have enabled the company to secure cash and deposits substantially exceeding borrowings subject to financial covenants. Accordingly, the company determined that, during the first-quarter cumulative period, the events or circumstances that could raise substantial doubt about the going concern assumption had been resolved.」
Although the financial-covenant violation continued, the company determined that material events related to the going concern assumption had been resolved, citing demand recovery, the elimination of blast-furnace repair costs, operating profitability from cost-structure reforms, waivers by financial institutions and cash and deposits exceeding borrowings. - FY2021-Q3MitigatedAnnual report
「The company maintains close relationships and continues constructive discussions with its principal banks, and therefore expects to receive continued support from them from April 2021 onward. As it expects to have sufficient funds through March 2022, the group has determined that no material uncertainty related to the going concern assumption exists.」
Although the financial-covenant breach continued, the company indicated that it expected support from its principal banks from April 2021 onward and sufficient funds through March 2022, providing an outlook for addressing the going-concern risk. - FY2021-Q2WorsenedAnnual report
「Under these circumstances, because the company violated the requirement to maintain consolidated net assets at or above 75% of the consolidated net assets at the end of the fiscal year ended March 2016, ¥1,200 million of short-term borrowings under loan agreements with financial covenants, for which the company is the borrower, are currently in breach of those covenants. The company has material events, etc. related to the going concern assumption, but has obtained the financial institutions' consent to waive, through the end of March 2021, the rights they acquired under the contracts against the company as borrower upon the occurrence of an event giving rise to a loss of the benefit of time.」
In addition to the ¥5,000 million breach continuing from the end of the previous fiscal year, a new breach involving ¥1,200 million in short-term borrowings under another net-asset maintenance covenant was disclosed at the end of the second quarter. Material events related to the going concern assumption also continued. - FY2021-Q1RestatedAnnual report
「Because the company violated the requirement to maintain consolidated net assets at or above 75% of the consolidated net assets at the end of the fiscal year ended March 2018, ¥5,000 million of short-term borrowings under term-loan agreements with financial covenants, for which the company is the borrower, are currently in breach. The company has material events, etc. related to the going concern assumption, but has obtained the financial institutions' consent to waive, through the end of March 2021, the rights they acquired under the contracts against the company as borrower upon the occurrence of an event giving rise to a loss of the benefit of time.」
The ¥5,000 million breach of the net-asset maintenance covenant and material events related to the going concern assumption continued. The financial institutions' waiver was expressly limited through the end of March 2021. - FY2020WorsenedAnnual report
「Because the company violated the requirement to maintain consolidated net assets at or above 75% of the consolidated net assets at the end of the fiscal year ended March 2018, ¥5,000 million of short-term borrowings under term-loan agreements with financial covenants, for which the company is the borrower, are currently in breach of those covenants.」
Net assets declined substantially because of significant impairment losses, and the financial-covenant breach continued at fiscal year-end with respect to ¥5,000 million in short-term borrowings. - FY2020-Q2First statedAnnual report
「As a result, the company's financial position deteriorated, and as of the end of the second quarter of the current consolidated fiscal year, it was in breach of financial covenants attached to borrowing agreements and other contracts with financial institutions, creating circumstances that could raise substantial doubt about its ability to continue as a going concern. However, as described in “2. Management's Discussion and Analysis of Financial Position, Operating Results and Cash Flows, (6) Remedial Measures to Resolve Material Events, etc. Related to the Going Concern Assumption,” the company has determined that no material uncertainty related to the going concern assumption exists.」
The financial position deteriorated because of impairment losses and the reversal of deferred tax assets, resulting in breaches of financial covenants in borrowing agreements with financial institutions. Based on remedial measures and agreements with the financial institutions, the company determined that no material uncertainty related to the going concern assumption exists.