A consortium led by Tokyo-based fund Japan Industrial Partners Inc., the preferred bidder for a potential buyout of Toshiba Corp., is unlikely to secure a bank loan needed to finance the takeover by the Nov. 7 deadline, sources familiar with the matter said Wednesday.

A group of banks, including Mitsui Sumitomo Banking Corp., have been in discussions with JIP on a loan of over 1 trillion yen ($6.8 billion) sought by the consortium as part of its Toshiba turnaround plan, but the banks did not give the nod due to the risks involved in the deal, the sources said.

The banks also found the expected amount of investment from other consortium members insufficient, they said. Orix Corp. and Chubu Electric Power Co. are among the companies JIP has asked to chip in for the buyout.

The failure to secure a bank loan to finance the buyout of Toshiba, which has a market capitalization of over 2 trillion yen, clouds the outlook for the consortium's bid.

Toshiba had demanded that the consortium submit a letter of commitment by Nov. 7 confirming the banks' intention to provide the requested loan for the turnaround plan, according to the sources.

The JIP-led group was selected as the preferred bidder earlier this month, gaining an advantage over another bidder, Japan Investment Corp., a state-backed fund seeking to team up with Bain Capital for the buyout.

Toshiba shares ended down 1.7 percent at 5,207 yen on the Tokyo Stock Exchange after losing as much as 2.6 percent on the Kyodo News report of the consortium's buyout financing outlook.

Related coverage:

Toshiba picks Tokyo fund group for potential 2.8 tril. yen buyout

Toshiba shareholders OK 2 new activist investors as board members

Toshiba gets 8 proposals for privatization from potential partners