Executives at crisis-hit Toshiba Corp yesterday faced hundreds of angry shareholders as the firm announced it has not yet clinched a deal to sell its prized chip business to a consortium of US, Japanese and South Korean investors.
The sale, reportedly worth about ¥2 trillion (US$17.87 billion), is seen as crucial for the cash-strapped company to plug massive losses at its US nuclear division, Westinghouse Electric Corp.
Last week, Toshiba said it had entered into exclusive talks with Japanese private-public partnership Innovation Network Corp, state-backed Development Bank of Japan Inc and US private equity fund Bain Capital, with South Korean chipmaker SK Hynix Inc acting as a lender.
The company had hoped to announce the sale before the meeting, but yesterday said that negotiations were still continuing.
“It is taking time to reach a consensus because the consortium comprises multiple parties,” it said in a statement. “Toshiba intends to continue the negotiation toward reaching a definitive agreement at the earliest possible date.”
Toshiba is the world’s No. 2 supplier of memory chips, behind South Korea’s Samsung Electronics Co.
The sale involving state-backed buyers means the Japanese government would effectively own the chip division.
Japan had concerns about losing a sensitive technology amid questions about security around systems already using Toshiba’s memory chips, which are also widely used in data centers.
The profitable division has accounted for about one-quarter of Toshiba’s total annual revenue.
The multibillion-dollar losses at Westinghouse have raised doubts about the future of Toshiba, one of Japan’s best-known companies, which is still recovering from a 2015 accounting scandal.
The firm is now probing whistle-blower claims of financial misconduct by senior managers at the US nuclear unit.
Toshiba has repeatedly delayed the release of its long-overdue earnings data, saying it needed more time to gauge the impact of Westinghouse on its balance sheet.
Toshiba said it has so far found no evidence to warrant criminal charges against Westinghouse executives.
“I apologize from the bottom of my heart to shareholders and other stakeholders,” Toshiba chief executive officer Satoshi Tsunakawa told investors yesterday.
The chip unit sale is seen as key to Toshiba’s turnaround, but it could still face a roadblock. US-based partner Western Digital, which jointly runs a key chip plant in Japan, opposes the sale.
Tsunakawa blasted the US firm’s bid for a court injunction as “unfair interference.”
Toshiba later said it has filed a ¥120 billion lawsuit against its US partner over the disputed deal.
Tsunakawa dismissed the possibility of liquidating the more than 100-year-old pillar of corporate Japan, just days after scandal-hit airbag maker Takata Corp filed for bankruptcy protection.
“We will do everything we can to avoid such a situation,” he told about 1,000 investors at the meeting.
Shareholders were unimpressed.
“Toshiba is in a state of emergency,” one investor said. “This company needs strong leadership that is capable of making the right business decisions.”
“Toshiba is becoming a third-rate company,” another investor said.
The firm’s hard-hit stock, which yesterday fell 1.84 percent to ¥287.6, is on a watch list for possible delisting from Japan’s premier exchange.
Hidesato Maekawa, a 78-year-old textile factory owner, seemed resigned to be stuck with Toshiba’s stock, which is down about 35 percent since late last year.
“Now that I have held the stock this long, I might was well keep it even if turns into a worthless piece of paper,” he told reporters before the meeting.
Even before the problems at Westinghouse, Toshiba’s reputation was badly damaged over separate revelations that top company executives had pressured underlings to cover up weak results for years after the 2008 global financial meltdown.
Toshiba — which has more than 180,000 employees globally — once touted its overseas nuclear business as a future growth driver, filling a hole left after the 2011 Fukushima Dai-ichi nuclear power plant disaster slammed the brakes on new nuclear projects in Japan.
However, delays and cost overruns hit Westinghouse’s finances hard as the global outlook for the nuclear business weakened.
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