Toshiba shares slide after it says could sell more of chip business
TOKYO – Shares in Toshiba Corp tumbled on Wednesday after the conglomerate said it would book a $6.3 billion hit to its US nuclear unit and may sell more of its prized flash-memory chip business than planned to urgently raise funds.
Scrambling for capital, Toshiba said it would consider selling most, even all, of its stake in the chips business – a decision that has investors questioning whether the company has a long-term future without the unit.
“Usually in a corporate turnaround plan, the company would keep its most competitive business after selling non-performing businesses,” said Masayuki Kubota, chief strategist at Rakuten Securities.
“This turnaround plan gives no hope for Toshiba’s future,” he said.
Toshiba will be meeting creditor banks on Wednesday to seek their understanding and support.
As of end of September, Toshiba’s loans from banks and insurers stood at about 800 billion yen (5.62 billion pounds), a financial source has told Reuters. Sumitomo Mitsui Banking Corp and Mizuho Bank are its biggest creditors.
While the two lenders and state-backed Development Bank of Japan Inc have so far expressed support for Toshiba, other creditors will need more convincing before they back Toshiba further, sources familiar with the matter have said.
“Toshiba needs to come up with a convincing turnaround plan but it’s not an easy task,” said an executive at one of the creditor banks. “And we need to make sure there are no more negative surprises,” he said. -Reuters