Toshiba offers memory chip shares as collateral for loans: sources | Reuters

By Taro Fuse and Taiga Uranaka | TOKYO TOKYO Japan's crisis-racked Toshiba Corp (6502.T) has offered shares in its memory chip unit to creditors as collateral to secure debt refinancing, people briefed on the matter said on Wednesday.The offer comes one day after the industrial conglomerate missed submitting audited third-quarter earnings for a second time and said it would 'actively consider' selling a majority stake in the Westinghouse nuclear unit at the center of its troubles.At a meeting with creditors on Wednesday, Toshiba also offered to put up stakes in other group firms such as Toshiba Tec Corp (6588.T), a cash register company, as well as real estate as collateral, said the people, who declined to be identified as they were not authorized to speak on the matter.Creditors have been asked to respond by March 24.In addition, it asked for its third one-month extension of a waiver for a violation of a covenant in a syndicated loan, the sources said. Its main banks - Sumitomo Mitsui Banking Corp (8316.T), Mizuho Bank (8411.T) and Sumitomo Mitsui Trust Bank (8309.T) - said they would give Toshiba their full support, the sources said. Representatives for the banks were not available for comment outside of regular business hours.But some regional bank officials attending the near two hour meeting expressed frustration, saying Toshiba should sell the stakes and pay back the money instead of offering them as collateral, one of the sources said

Reuters March 15, 2017 22:30:09 IST
Toshiba offers memory chip shares as collateral for loans: sources
| Reuters

Toshiba offers memory chip shares as collateral for loans sources
 Reuters

By Taro Fuse and Taiga Uranaka
| TOKYO

TOKYO Japan's crisis-racked Toshiba Corp (6502.T) has offered shares in its memory chip unit to creditors as collateral to secure debt refinancing, people briefed on the matter said on Wednesday.The offer comes one day after the industrial conglomerate missed submitting audited third-quarter earnings for a second time and said it would 'actively consider' selling a majority stake in the Westinghouse nuclear unit at the center of its troubles.At a meeting with creditors on Wednesday, Toshiba also offered to put up stakes in other group firms such as Toshiba Tec Corp (6588.T), a cash register company, as well as real estate as collateral, said the people, who declined to be identified as they were not authorized to speak on the matter.Creditors have been asked to respond by March 24.In addition, it asked for its third one-month extension of a waiver for a violation of a covenant in a syndicated loan, the sources said. Its main banks - Sumitomo Mitsui Banking Corp (8316.T), Mizuho Bank (8411.T) and Sumitomo Mitsui Trust Bank (8309.T) - said they would give Toshiba their full support, the sources said. Representatives for the banks were not available for comment outside of regular business hours.But some regional bank officials attending the near two hour meeting expressed frustration, saying Toshiba should sell the stakes and pay back the money instead of offering them as collateral, one of the sources said.

A Toshiba spokesman said the company is considering various options to secure funds but that there was nothing to announce right now.The TVs-to-construction conglomerate is putting up most or even all of its prized memory chip business for sale to cope with an upcoming $6.3 billion writedown for Westinghouse and to create a buffer for potential losses down the road.A Japanese state-backed fund, the Innovation Network Corporation of Japan (INCJ), may invest in its memory chip business as a minority partner - a move that would help the government prevent a sale to bidders it deems risky to national security, separate sources familiar with the matter said.Discussions on a potential investment are, however, at a very early stage and may not develop further as some people within the government are concerned it could be seen as a publicly funded bailout, one of the sources said.

DELISTING RISK
Shares in Toshiba tumbled to end down 12 percent on Wednesday, hurt by growing fears of a delisting and a lack of clarity on whether Toshiba would proceed with a Chapter 11 filing for Westinghouse - a move that could stem losses.The company now has a market value of just $7 billion, less than half of what it was worth in December.The Tokyo Stock Exchange placed the stock on its supervision list on Tuesday - an automatic move that follows Toshiba's failure to clear up concerns about its internal controls a year and a half after a 2015 accounting scandal.

Market participants said the bourse's action meant that the shares were now "untouchable" for institutional investors who cannot invest due to compliance reasons.Toshiba would be delisted if the bourse is not satisfied with a report on internal controls that Toshiba submitted on Wednesday. The report, required since the 2015 accounting scandal, must also address internal control lapses since then."Crucial details about Westinghouse won't be there. Toshiba is already in trouble for delaying the filing of its quarterly earnings twice, and without the complete report, the exchange is unlikely to find its report satisfactory," said Fumio Matsumoto, a senior fund manager at Dalton Capital Japan.Westinghouse has been plagued by huge cost overruns at two U.S. projects in Georgia and South Carolina.Toshiba has also expanded a probe into the U.S. nuclear unit after finding that certain managers exerted 'inappropriate pressure' in the accounting for the acquisition of the U.S. nuclear power plant construction company that handles the two projects.($1 = 114.6100 yen) (Additional reporting by Makiko Yamazaki, Yoshiyasu Shida, Ayai Tomisawa and Hideyuki Sano; Editing by Edwina Gibbs)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.