TIDM15KD
RNS Number : 0915I
Toyota Credit Canada Inc
30 March 2020
Publication of Form 8-K - Toyota Motor Credit Corporation
Toyota Motor Credit Corporation ("TMCC") has published its
Current Report on Form 8-K ("Form 8-K") which it has filed with the
Securities and Exchange Commission on 27 March 2020, announcing
that Toyota Motor North America, Inc. ("TMNA") has suspended
production at all of its automobile and components plants in North
America, including Canada, Mexico and the United States, from 23
March 2020 through 17 April 2020, with production currently
expected to resume on 20 April 2020. However, no assurances can be
made that production will resume on the date currently planned.
This action was taken due to the increasing social and economic
impact of the coronavirus ("COVID-19") pandemic, a significant
decline in vehicle demand, and TMNA's desire to protect the health
and safety of its team members, dealers, suppliers and communities.
Toyota Motor Corporation ("TMC") has temporarily suspended
production at selected plants in countries outside of North
America. In addition, Toyota and Lexus dealer sales operations have
been deemed non-essential businesses and forced to close pursuant
to government decree in many states with additional states expected
to follow.
On 26 March 2020, Moody's Investors Service, Inc. ("Moody's")
downgraded to A1 from Aa3 the senior unsecured long-term ratings of
TMC and its captive finance subsidiaries, including TMCC and Toyota
Credit Canada Inc. ("TCCI") and Moody's Japan K.K. ("Moody's
Japan") downgraded to A1 from Aa3 the senior unsecured long-term
ratings of TMC and its captive finance subsidiaries, including
Toyota Motor Finance (Netherlands) B.V. ("TMF"), Toyota Finance
Australia Limited ("TFA"); and all ratings were placed by Moody's
and Moody's Japan under review for further downgrade, including
TMC's and TMCC's, TMF's, TCCI's and TFA's P-1 short-term ratings.
The ratings outlook has changed to under review from negative. On
26 March 2020, S&P Global Ratings, acting through S&P
Global Ratings Japan Inc. placed the AA- long-term ratings and the
A-1+ short-term ratings of TMC and its subsidiaries, including
TMCC, TMF, TCCI and TFA, on CreditWatch with negative
implications.
Supplemental Risk Factor
In light of recent developments relating to COVID-19, TMCC is
supplementing Item 1A. Risk Factors in the Annual Report on Form
10-K for the year ended 31 March 2019. The following risk factor
should be read in conjunction with the risk factors described in
TMCC's Annual Report on Form 10-K for the year ended 31 March
2019.
"We face various risks related to health epidemics and other
outbreaks, which may have material adverse effects on our business,
financial condition, results of operations and cash flows.
We face various risks related to health epidemics and other
outbreaks, including the global outbreak of COVID-19. The COVID-19
pandemic, changes in consumer behavior related to illness, pandemic
fears and market downturns, and restrictions intended to slow the
spread of COVID-19, including quarantines, government-mandated
actions, stay-at-home orders and other restrictions, have led to
disruption and volatility in the global capital markets, which has
increased our cost of capital and adversely affected our ability to
access the capital markets.
In addition, the COVID-19 pandemic and restrictions intended to
slow the spread of COVID-19 have adversely affected our business,
and the business of our affiliate, TMNA, and our ultimate parent,
TMC, in a number of ways. Similar to relief options we have
previously offered to customers and dealers impacted by natural
disasters such as hurricanes, floods, tornadoes and wildfires, we
are offering payment relief options to customers and dealers
impacted by COVID-19, including finance contract extensions, lease
deferred payments, temporary interest deferrals for dealer
floorplan financing, and principal payment deferral options for
dealer real estate and working capital loans, and have temporarily
suspended outbound collection activities in states with state-wide
stay-at-home orders and repossession activities nationwide
(collectively, the "COVID-19 Relief"). Unlike the relief options
offered for natural disasters, which were limited to the affected
geographies, the COVID-19 Relief is being offered nationwide due to
the global impact of the COVID-19 pandemic, is expected to increase
our credit and residual value losses, and will adversely affect our
business, financial condition, results of operations, and cash
flows. We have also temporarily transitioned the majority of our
team members to remote work arrangements, and many Toyota and Lexus
dealerships have temporarily closed and more may voluntarily close,
or be mandated to close, in the near future. TMNA has temporarily
suspended production at all of its automobile and components plants
in North America and TMC has temporarily suspended production at
selected plants in countries outside of North America.
These events have disrupted the supply chains of the vehicles we
finance, have caused a decline in the sale of vehicles and our
financing and insurance products, and could ultimately have a
material adverse effect on the sale of vehicles and our financing
and insurance products. These events have also caused an increase
in unemployment claims, are expected to result in decreased
consumer spending, and could cause economic deterioration. In
addition, these events could result in lower used vehicle prices,
increased delinquencies and dealer defaults, or cause other
unpredictable and adverse events. The foregoing events, and the
uncertainty relating thereto, have also adversely affected our
credit rating.
If significant portions of our workforce are unable to work
effectively as a result of the COVID-19 pandemic, including because
of illness, quarantines, facility closures, ineffective remote work
arrangements or technology failures or limitations, our operations
would be adversely impacted. Certain of our third-party suppliers
and business partners that we rely on to deliver our products and
services and to operate our business have informed us that they
will be unable to perform fully, and we expect to continue to
receive similar notifications from other suppliers and business
partners in the near future, which could adversely impact our
ability to operate our business and increase our costs and
expenses. These increased costs and expenses may not be fully
recoverable or adequately covered by insurance. We are working with
our stakeholders (including customers, dealers, team members,
suppliers and business partners) to assess the impact of the
COVID-19 pandemic and to take actions in an effort to mitigate
adverse consequences. The duration of the COVID-19 pandemic is
uncertain, and the foregoing impacts and other unforeseen impacts
not referenced herein, as well as the ultimate impact of the
COVID-19 pandemic, are difficult to predict and could have a
material adverse effect on our business, financial condition,
results of operations and cash flows."
To view the Form 8-K, please paste the URL below into the
address bar of your browser.
http://www.rns-pdf.londonstockexchange.com/rns/0915I_1-2020-3-30.pdf
A copy of the Form 8-K will be submitted to the National Storage
Mechanism and will be available shortly at:
http://www.morningstar.co.uk/uk/NSM
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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