Earlier on Friday, Moody’s downgraded the credit rating of Nissan to junk, saying the decision “reflects Nissan’s weak profitability driven by slowing demand for its ageing model portfolio”.
Nissan announced thousands of job cuts last year after reporting a 93 per cent plunge in first-half net profit, and the firm now expects an annual loss of more than US$500 million.
“Even if the company successfully executes its restructuring plan with cost reductions and new model releases, we do not expect free cash flow to turn positive until fiscal 2026 at the earliest,” Moody’s said.
It gave Nissan a rating of “Ba1”, a category with high credit risk often described as junk.
Honda and Nissan’s merger talks apparently unravelled after Honda proposed to make Nissan a subsidiary instead of a plan announced in December to integrate under a new holding company.
The Financial Times said several Nissan board members were aware of the new proposal.
Reports in December said Taiwanese electronics behemoth Foxconn had unsuccessfully approached Nissan to buy a majority stake.
It then reportedly asked Renault to sell its 35 per cent stake in Nissan – a pursuit that was put on hold before the merger talks were announced.
“The proposal envisions a consortium of investors, with Tesla as the largest backer, but also includes the possibility of a minority investment by Foxconn,” the Financial Times said.
