Japan: Toshiba Chairman Resigns Amid Bankruptcy Speculation
- Author: Zachary Reyes Feb 14, 2017,
Feb 14, 2017, 19:15
Toshiba said in a separate statement it had to put off the release of its quarterly earnings as it learned of "inappropriate pressure" at its United States nuclear unit Westinghouse Electric over the purchase of CB&I Stone & Webster, a USA nuclear power plant builder.
Although the company said the exact size of the write-down will depend on the accounting review, which will be completed in the first quarter of 2017 (April-June), local media has pegged the losses at over 700 billion yen ($6.12 billion).
The company already was grappling, however, with a scandal over company officials' doctoring accounting books to meet unrealistic profit targets.
One of those who assumed a top role in the wake of the scandal was Chairman Shigenori Shiga, a longtime executive in Toshiba's nuclear business. It is unclear how this announcement will affect the sale of the minority stake in Toshiba's memory business. The company's share price was down 8% for the day.
The company has postponed releasing its finalized financial results for the nine months through December for up to one month due to auditing problems related to suspected misconduct at its U.S. Unit.
"On January 28, managers at Westinghouse indicated concerns that senior management at Westinghouse was exerting inappropriate pressure in order to advance the PPA process". It said a law firm hired by Toshiba had interviewed those involved in the issue and found multiple inconsistencies in their stories.
In a section entitled "outlook for the project", Toshiba said that it "will consider participating in the project without taking on any risk from carrying out actual construction work".
Toshiba Corp. says it expects to book a 712.5 billion yen ($6.3 billion) writedown in its nuclear power business, citing cost overruns at a US unit and diminishing prospects for its atomic-energy operations. Toshiba's prior guidance for fiscal 2016 was net income of 145.0 billion yen. Stricter safety standards after the 2011 Fukushima nuclear accident in Japan added to the cost of plants in China and the U.S.
The company said it will reorganise its nuclear business to be directly under Mr Tsunakawa for stricter monitoring. The company hopes to fix that by the end of March by selling its flash-memory business and other assets.
Toshiba may also sell Westinghouse Electric Co.
The nuclear losses stem from cost overruns at two US facilities still under construction-reactors in Georgia and SC commissioned by utilities Southern Co. and Scana Corp., respectively.
Toshiba may now quit the nuclear business completely, selling Westinghouse Electric in the U.S., the source of the losses, and pulling out of the newbuild Moorhouse reactor project in Cumbria, Great Britain.
NuGen plans to build three nuclear reactors at the Moorside site on the coast of Cumbria, northwest England, using Westinghouse technology now being assessed by Britain's nuclear regulator.
A NuGen representative said the company "had not yet secured an EPC structure to build at the site, but did not intend to utilise Toshiba's services".
Investors said the turmoil left them uncertain whether Toshiba had a viable survival plan.
The company has also chose to review its nuclear power business as it has already suffered a setback at home and overseas since Japan's worst atomic disaster at the Fukushima Daiichi Nuclear Power Station in March 2011.
Kosaku Narioka contributed to this article.