Shares in Toshiba fell as much as 13.3 per cent after reports the company told lenders that the loss in its US nuclear business would be larger than the previously estimated ¥500bn ($4.4 billion). The share price tumble came after Nikkei reported the company was asking for financial support from Development Bank of Japan and other lenders. Toshiba said at the end of December it would make writedowns of “several billions of dollars” to cover cost overruns linked to nuclear construction company Stone & Webster in the US. While the company failed to give a figure, analysts expected the writedown to be between $5bn and $8bn. Shares in the company have fallen 42.3 per cent since the December announcement. Toshiba’s US nuclear power subsidiary Westinghouse bought S&W in 2015 under a promise of $2bn in annual revenues. Toshiba’s potential writedowns from its nuclear operations, estimated by some to be as high as $8bn, look close to unbearable. Its lenders look nervous. Its options, including a partial fire sale of noncore assets that could raise as much as $5bn, look humiliating for a group that in its earliest incarnations gave Japan its first electric streetlamps, power stations, lightbulbs, refrigerators and colour televisions. Shares in Toshiba were traded as low as ¥250 a share during the morning session, while the benchmark Topix index was up 1.1 per cent.
FT 19th Jan 2017 read more »
In 2015, when the company confessed to falsifying it s profits to the tune of more than $1bn, many felt Toshiba had hit a nadir. But late last month, the company revealed that its problems went far deeper and that it faced a multibillion-dollar writedown on its US nuclear business. Credit rating agencies downgraded the company. The market no longer saw a dependable hero lumbering out of trouble, but an accident-prone scoundrel up to its old tricks. In the three days that followed the December 27 bombshell, Toshiba’s shares plunged nearly 42 per cent. Even under the harshest scrutiny of its corporate life, Westinghouse, Toshiba’s US nuclear power subsidiary, had managed to get past Toshiba’s board a dismally bad deal in late 2015 to buy nuclear construction company Stone & Webster from Chicago Bridge & Iron. For an acquisition that was supposed to deliver $2bn in annual revenues, Toshiba’s disclosure at the time was “surprisingly minimal”, say investors. Perhaps with good reason. Exactly a year after that deal was signed, Toshiba admitted on December 27 that it would have to make writedowns of “several billion dollars” to reflect big cost overruns and delays on S & W’s nuclear projects in the US. The numerical vagueness of that statement has left analysts speculating that the total writedown, to be announced by mid-February, could be between $5bn and $8bn. Even the low end of that range would largely wipe out Toshiba’s ¥363bn of shareholder equity and leave it scrambling for options. Analysts say Toshiba was struggling to recoup its Westinghouse investment even before Fukushima. It paid 37 times Westinghouse’s operating profit, twice the amount that some of its peers bid. After long denying such a risk, Toshiba took a $2.3bn writedown on the value of Westinghouse’s goodwill in April last year.
FT 19th Jan 2017 read more »
Toshiba Corp’s (6502.T) financial crisis deepened on Thursday as media reported it may book a bigger-than-expected $6 billion writedown on its U.S. nuclear business, sending its shares sliding 15 percent. 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 government-backed Development Bank of Japan (DBJ) for assistance, said a source with knowledge of the matter, who was not authorized to speak on the matter and declined to be identified.
Reuters 19th Jan 2017 read more »