Shares of Japanese electronics giant, Toshiba Corp (6502.T) slumped on Wednesday, February 15, after the conglomerate said it would book a $6.3 billion hit to its U.S. nuclear unit and may sell a majority stake in its prized flash-memory chip unit as it scrambles for cash to stay in business.
Toshiba shares slid to end down 9 percent, giving it a market value of 889 billion yen ($7.8 billion), less than half its value in mid-December. Just under a decade ago, the firm was worth almost 5 trillion yen.
At a meeting with its creditors on Wednesday, Toshiba executives asked for an extension of a waiver for a loan covenant violation until the end of March, financial sources said, declining to be identified as they were not authorized to speak to the media on the matter.
Cuts to credit ratings after Toshiba warned in December of a large writedown put it in violation of one loan covenant, which could prompt lenders to call in loans early.
Toshiba’s loans from banks and insurers stood at about 800 billion yen ($7 billion) as of end-September, a financial source has said. Sumitomo Mitsui Banking Corp (8316.T) and Mizuho Bank (8411.T) are its biggest creditors.
Facing a March 27 deadline to avoid a delisting, Chief Executive Satoshi Tsunakawa said he would consider selling most, even all, of the chips business – a turnaround from the conglomerate’s previous stance that it would sell only about 20 percent.
The change of direction has prompted investors to question whether the company would have a long-term future without control of the unit and could well shake up the bevy of suitors interested in a piece of the world’s biggest NAND chip producer after Samsung Electronics Co Ltd.
Taiwan’s Foxconn (2317.TW), formally known as Hon Hai Precision Industry Co Ltd, is among the companies and funds that were bidding for the smaller stake, a source with direct knowledge of the offer said, declining to be identified because he is not authorized to talk to the media.
Toshiba’s new openness towards selling more of its chips business comes as the beleaguered conglomerate failed to deliver audited third-quarter earnings as scheduled on Tuesday, instead saying it needed more time to look at potential problems at its Westinghouse division. The expected $6 billion write-down will also wipe out shareholders’ equity.
