Shares plummet 15% at Toshiba on reports of $6bn writedown

Japanese industrial giant’s shares drop 15% over fears for US nuclear business

 

Toshiba’s financial difficulties deepened on Thursday after reports it may book a bigger-than-expected $6 billion (€5.6 billion) writedown on its US nuclear business, sending its shares sliding 15 per cent.

The reports cast doubt on whether measures the beleaguered industrial conglomerate is expected to take to bolster its finances - including the sale of a stake in its chip business - will be sufficient to address any shortfall.

Toshiba has also approached the government-backed Development Bank of Japan for assistance, according to a source with knowledge of the matter, who was not authorised to speak on the matter and declined to be identified. Other sources said Toshiba executives will sit down with representatives from its main banks as early as Thursday to discuss possible support. The president of Sumitomo Mitsui Banking Corporation, one of its key lenders, said the bank would like to support Toshiba as much as possible.

Representatives for state bank and Mizuho were not immediately available for comment. Sumitomo Mitsui Trust Bank, another main bank, declined to comment.

Battered by an accounting scandal in 2015, Toshiba was suddenly plunged back into crisis late last year after it emerged that it would have to write down cost overruns at projects handled by a newly acquired US nuclear power plant construction firm. Sources had previously flagged the size of the expected charge at more than 500 billion yen (€4.10 billion). Kyodo news agency and other domestic media said that estimates had now ballooned to 700 billion yen, in part due to unfavourable currency rates.

Asset sales

Toshiba’s chips unit could be worth more than 1 trillion yen (€8.2 billion), industry sources have previously said. “The key thing to watch here is whether Toshiba’s liabilities will exceed its assets. If that happens it will be difficult for some banks to step up with new financing,” said Mana Nakazora, chief credit analyst at BNP Paribas. Nakazora said, however, she did not expect Toshiba to default on its debt as its main banks would stick by it, adding that some sort of package involving asset sales, financing and capital from the government would likely be arranged.

Shares in Toshiba slid as much as 26 per cent in Thursday, but pared losses to finish 15 per cent lower, giving it a market value of €10.3 billion.

National broadcaster NHK reported that Toshiba, which employs almost 190,000 people in businesses ranging from washing machines and elevators to sewerage plants and batteries, was looking to sell some units and other assets to raise 300 billion yen in cash.

– (Reuters)