Toshiba seeking $8.8 bn for majority stake in chip business: report

Debt laden Toshiba Corp is seeking to raise at least ¥1 trillion ($8.8 billion) from the sale of a majority stake in its flash memory chip business to save the group from the impact of a $6.3 billion write-down at its US nuclear business.

Toshiba has not yet decided on the actual size of the stake sale, but is now reported to be ready to sell a majority stake or even its entire stake in the NAND memory chip unit, which makes memory chips for mobiles and tablets and is its most valuable business.

Toshiba had previously planned to sell a 19.9-per cent and had received an offer of ¥400 billion ($3.6 billion) for the stake in its flash memory business, Reuters had reported citing a person directly involved in the deal. (See: Toshiba receives ¥400-billion bid for 19.9% stake in flash memory business: report) The bidders included rivals SK Hynix and Micron Technology and financial investors like Bain Capital.

Toshiba had sought to raise around ¥300 billion from the stake sale, according to the report, which cited unnamed sources.

It needed to raise funds by the end of March to offset a likely multi-billion dollar writedown on Westinghouse, its US nuclear power business.

Toshiba is now reported to have restarted the sale process as soon as possible and may sell to multiple buyers rather than one bidder.

The sale "is the best and the only way Toshiba can raise a large amount of funds and wipe out concerns about its credit risk," the source said, adding that the sale should be completed by the end of March next year.

The size of the stake sale will depend more on the amount that can be raised, the report said. He also said the company would like to retain a one-third holding that would give it a degree of control over the business.

Toshiba Corp's losses are likely to have exceeded its assets as of the end of December and it needed to raise funds by the end of March to offset a likely multi-billion-dollar write-down on Westinghouse, its US nuclear power business.

The Tokyo-based electronics appliance maker's estimated loss from its nuclear business in the US stood at about ¥700 billion, while its capital stood at ¥360 billion at the end of September.

If the loss in relation to its capital were to be reported in the company's financial statement for the October-December quarter, Toshiba would be in capital deficit.

If Toshiba's deficits were to exceed its assets as of 31 March, the end of its business year, the company's shares would be moved from the TSE's First Section to the Second Section.

In the event of Toshiba's failure to rectify the situation within a year of that date, its shares would be delisted.