Toshiba's nuclear losses

January 26, 2017

Toshiba's loss from U.S. nuclear power business swells to 680 billion yen

http://mainichi.jp/english/articles/20170126/p2a/00m/0na/006000c

Financially troubled Toshiba Corp. has incurred a loss of around 680 billion yen from its U.S. nuclear power business, the Mainichi Shimbun learned on Jan. 25.

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In response to this heavy deficit, Toshiba will hold a board meeting on Jan. 27 -- at which it will determine a plan for breaking off its flagship semiconductor business division, and enlisting external stakeholders -- in an attempt to avoid falling into excessive debt, as of the end of the business year ending March 2017.

Initially, Toshiba anticipated losses of 480 billion yen, but the figure was actually confirmed to be around 200 billion yen higher -- at 680 billion yen -- following an appraisal in the U.S. that was completed last weekend. The main cause for this heavy loss is thought to be the further swelling of costs relating to Toshiba's nuclear power plant construction project in the U.S. Following this revelation, the company explained the situation to its main creditor banks earlier this week, and is planning to publicize details about the loss on Feb. 14. There is still a chance that the final loss figure may fluctuate further.

At the end of September 2016, Toshiba's equity capital was 363.2 billion yen. In autumn 2016, Toshiba anticipated net profits of 145 billion yen as of March 2017, but if the company's loss swells to 680 billion yen, then this will have a detrimental effect on Toshiba's equity capital, potentially resulting in a deficit or excessive debt. Therefore, the company is aiming to secure funds through enlisting external stakeholders for its split-off semiconductor business division, thereby increasing capital.

In its mission to secure funds by the end of March 2017, Toshiba is aiming to attract investment amounting to about 19.9 percent of the total, but no more -- because a capital contribution ratio of 20 percent or more requires procedures under the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade.

Toshiba has already approached several investment funds such as Kohlberg Kravis Roberts & Co. L.P. in preparation for a planned bidding process. The company has also apparently approached Canon Inc. and other firms to sound out investment in the region of 200 billion yen to 300 billion yen. The company is also looking to sell off shares and real estate related to its subsidiaries, including Toshiba TEC Corp. Furthermore, Toshiba is also considering selling off its Toshiba Hospital located in Tokyo's Shinagawa Ward.