Toshiba to sell new shares to avoid a delisting risk

Marco Green
November 20, 2017

Toshiba Corp. said Sunday it will issue more than 2 billion new shares for third-party allotment on December 5 to raise ¥600 billion in fresh capital, an effort to remain listed on the Tokyo Stock Exchange. Toshiba shares fell as much as 5.1 per cent in Tokyo trading.

- As the parent company of Westinghouse, which has filed for Chapter 11 bankruptcy protection in the United States, Toshiba owes the owners of two US nuclear projects $5.9 billion.

If the transactions are successful, Toshiba expects the consolidated negative 750 billion yen on its balance sheet will be erased by the end of the fiscal year in March.

Overseas firms, including Effissimo Capital Management PTE, are planning to make investments, it said.

But regulatory reviews globally threaten its ability to close the sale by the March end of the business year, which would put the company in negative net worth for a second year in a row, imperilling its TSE listing. "But dilution is still something to be reckoned with".

Toshiba agreed in September to sell its chip unit to a group led by Bain Capital for $18bn. The US company has filed for arbitration to resolve the dispute, a process that may drag out and complicate the closing.

Toshiba is on the ropes after the disastrous acquisition of United States nuclear energy firm Westinghouse, which racked up billions of dollars in losses before being placed in bankruptcy protection.

The company would use proceeds from the share sale to pay off liabilities related to Westinghouse and book losses that would allow tax write-offs sufficient to boost its assets back above liabilities, the company said. - It plans to sell its claims against Westinghouse and some loans, together amounting to 760 billion yen.

Other reports by Click Lancashire

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