Toshiba may file for bankruptcy: chairman resigns following $6.3 billion loss

New Year's Eve 2014 In Times Square
Toshiba will report quarterly results on Tuesday
Author

15 February, 2017

Toshiba said yesterday that its chairman, Mr Shigenori Shiga, is stepping down from his post as the company warned it is set to book multi-billion-dollar losses in its USA nuclear business.

The loss came from Toshiba's investment in Westinghouse, an American nuclear power company.

In its preliminary results, Toshiba said it anticipates a group net loss of 500 billion yen ($4.4 billion) for April-December of past year, including the 712.5 billion yen hit from its nuclear business.

Shigenori Shiga, its chairman, would step down Wednesday to take responsibility for the losses, the company said.

Toshiba subsidiary Westinghouse Electric reportedly overpaid for the acquisition of Chicago Bridge and Iron (CBI) in 2015. It has already chose to spin off its core chip business and said today it is considering selling a majority stake, for which multiple potential investors have made offers. Those woes are partly the result of cost overruns and delays at two nuclear plants being constructed in Georgia and SC.

Toshiba has already sold its medical devices unit to Canon and most of its appliance business to China's Midea Group.

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The company said its shareholder equity fell into negative territory as of December 31, leaving just a month and a half to find ways to get back above zero before the March 31 fiscal year-end.

Today, Toshiba announced that it would take a $6.2 billion write-down on the value of its nuclear plant construction business. Mr. Tsunakawa said Toshiba was willing to sell a majority stake in Westinghouse, but analysts said they doubted anyone would want to buy it.

Toshiba's US$5.4 billion acquisition of Westinghouse in 2006 was a bet on the future of nuclear power and a way to balance volatility of chip operations with steady long- term revenues. Instead, it said it wasn't ready and begged for another month to file.

Toshiba manufactured one of the reactors in Japan's crippled Fukushima Daiichi nuclear plant, which was hit by an natural disaster and tsunami in March 2011, and has since been involved in the clean up. The Nuclear Power Corporation of India then allocated the Kovvada site for construction of six Westinghouse AP1000 reactors. "Uncertainty over the Toshiba deal shows exactly why foreign investors shouldn't be left to keep Britain's lights on", he added.

Toshiba's financial problems have raised concerns about the viability of many of its overseas plans.


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