Toshiba seeks 600b yen in share sale to avoid delisting

Toshiba seeks 600b yen in share sale to avoid delisting

Tokyo stocks opened lower Monday morning following declines on Wall Street, with Toshiba plunging after the embattled Japanese conglomerate announced plans to issue new shares.

Toshiba's board met on Sunday and approved a plan to raise 600 billion yen by offering new shares to 60 overseas investors who have signed up to the deal, the company said. But potentially lengthy regulatory reviews mean the deal may not close before the end of March.

Toshiba's flash memory unit may not be sold in time to bring in the necessary capital, because it needs to clear competition laws in different countries.

If the transactions are successful, Toshiba expects the consolidated negative 750 billion yen on its balance sheet will be erased by the end of the fiscal year in March. "But dilution is still something to be reckoned with". The sale has been complicated by legal action from Western Digital Corp, which has argued it should have veto rights because of its partnership with Toshiba.

Singapore-based fund Effissimo Capital Management, established by former colleagues of Japan's best-known activist investor, Yoshiaki Murakami, will become the largest shareholder in Toshiba with an 11.34% stake.

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If a company listed on the TSE posts a second straight year of negative net worth, its shares will be delisted under the exchange's rules.

"The foreign funds and activists are seeking upside, betting on the possibility Toshiba will achieve a V-shaped recovery", Akino said.

The struggling company agreed to sell its prized memory chip business in September, to a consortium led by private equity firm Bain Capital and backed financially by Apple, Dell and other USA and Japanese firms.

Toshiba's board met on Sunday to approve the plan, which would plug a balance sheet hole left by the company's bankrupt US nuclear power business.

Toshiba also confirmed that it is looking at selling Westinghouse assets. If Toshiba settles obligations to Westinghouse creditors, it will then be able to request reimbursement from the US-based reactor-maker.

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