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Nissan is reportedly seeking a government-backed loan in the UK to bolster its Sunderland plant, as it aims to raise around ¥1 trillion ($7 billion) through asset sales and debt acquisition, according to sources in the know.

The Japanese automaker, facing financial difficulties, plans to liquidate assets and access debt markets to meet significant loan obligations due next year. This financial strategy involves a £1 billion syndicated loan, secured by guarantees from UK Export Finance.

As part of its draft plans, Nissan might issue over ¥600 billion in convertible bonds and financial securities, alongside generating funds through asset and factory sales, including a sale-and-leaseback agreement for its Yokohama headquarters.

The fundraising target could change significantly depending on factors such as vehicle sales and President Donald Trump’s tariffs on car imports to the US, the people added.

One of the people said Nissan’s priority was to improve its balance sheet before the company raised money from capital markets.

Nissan declined to comment, and UKEF did not immediately respond to a request for comment. Bloomberg first reported details of the plans.

Ivan Espinosa, who became chief executive in April, has the mammoth task of delivering a restructuring plan that includes cutting 20,000 jobs, shutting down seven of its 17 factories and speeding up vehicle development.

Espinosa was pushed into deepening the turnaround plan after shortlived discussions to merge with Japanese peer Honda collapsed.

The Sunderland plant appears to have been spared from the factory closures, and Nissan vowed in 2023 to increase electric car output there through a £1.12bn investment.

The £1bn syndicated loan guarantee under consideration by UKEF is separate from a £1bn UK government-backed funding package announced this month to support a new battery factory in Sunderland for Nissan supplier AESC, one of the people said.

Nissan reported a net loss of ¥671bn in the year ending in March, its largest since 1999 when it was rescued from bankruptcy by Renault.

It recorded negative free cash flow of ¥243bn for its automotive business, which is expected to grow to ¥550bn in the first quarter, and is targeting positive free cash flow by its 2026 financial year. It had ¥2.2tn of cash and cash equivalents.

“They are climbing K2,” said Christopher Richter, analyst at CLSA, referring to one of the world’s deadliest mountains. “This year is going to be an ugly year.”

During its earnings presentation this month, the company said it planned to refinance between ¥400bn and ¥600bn of the ¥700bn of debt maturing in the current financial year ending in March 2026.

On Tuesday, a company filing showed that four former top executives including Makoto Uchida, who led the group for about five years, received ¥646mn in severance pay.