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Toshiba may file for bankruptcy: chairman resigns following $6.3 billion loss
Toshiba may be facing bankruptcy amidst a failed attempt to salvage the company’s fortunes. Toshiba confirmed today that it will take a $6.3 billion hit thanks to its problematic US-based nuclear construction business. In response, the company’s chairman will step down tomorrow.
Toshiba had attempted to avoid the $6.3 billion write-down by selling a 20 percent stake in its profitable memory business. While that offer had attracted several bids from major players including Western Digital, SK Hynix and Mediatek, the company confirmed today that it will indeed shoulder the loss.
According to Tokyo Stock Exchange rules, Toshiba had until noon today to deliver its quarterly financial results. It failed to do so and later admitted it was “not ready” and requested more time to file its earnings.
Toshiba claimed “we need further research on the internal reporting … and its impact on financial results” regarding its acquisition of a major contractor responsible for the construction of several nuclear power plants in the US.
Toshiba subsidiary Westinghouse Electric reportedly overpaid for the acquisition of Chicago Bridge and Iron (CBI) in 2015. Westinghouse managers allegedly exerted “inappropriate pressure” on those responsible for reviewing the details of the acquisition at the time. Toshiba has since admitted that managerial pressure circumvented “internal controls” intended to avoid the kind of costly predicament Toshiba now finds itself in.
While confirming the unaudited $6.3 billion loss, Toshiba also advised that its chairman, Shigenori Shiga, will step down from the board tomorrow, but stay on as an executive. Analysts are now concerned the company will be forced to file for bankruptcy, with 200,000 jobs at risk in Japan alone.
Toshiba has already confirmed it will halt expansion of its US nuclear business, but will reportedly complete its two reactors that are currently under construction in Georgia and South Carolina. The company has also put a halt on its nuclear expansion plans in other countries including the UK. It is unclear how this announcement will affect the sale of the minority stake in Toshiba’s memory business.