TOKYO -- Western Digital and Kioxia Holdings have secured 1.9 trillion yen ($12.7 billion) in financing from a group of Japanese lenders to smooth the way for a merger between the two chipmakers, Nikkei learned Friday.

The two manufacturers look to sign a preliminary agreement this month. The deal basically would involve an equity swap between them, but loans taken out during Japan-based Kioxia's restructuring need to be refinanced.