Toshiba chairman steps down over $6.3B nuclear business loss; bankruptcy looms
00:44, Feb 15, 2017
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The delay follows growing expectations that the charge for the writedown in its U.S. nuclear business could be as high as 700 billion yen ($6.2bn) - enough to wipe out the group's shareholder equity and send Toshiba's net worth into the red.
Toshiba Corp.'s chairman resigned Tuesday after the company logged such massive losses in its nuclear business that it must sell its lucrative computer-chip business to avoid going belly-up.
It is also moving to spin off its memory chip business to fix its battered balance sheet.
It is understood that Shiga is stepping down to take responsibility for the results while other executives will take pay cuts.
The willingness to sell more than half of the cash cow, after having initially offered less than 20%, was the biggest surprise in the reform package released that day.
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The company only had shareholders' equity of some ¥360 billion as of the end of September, or just 7.5 percent of assets, well below the 30 percent level seen as a healthy financial condition.
Shaw and Toshiba bought Westinghouse in 2006.
Fast forward to Tuesday, when Toshiba confirmed that it wasn't kidding, and said that a 712.5 billion yen ($6.3 billion) impairment charge on its nuclear operations will lead to a 499.9 billion yen net loss for the nine months through December.
Now, Toshiba is establishing a new structure, with a Nuclear Business Corporate Oversight Committee chaired by its CEO and Toshiba executive officers serving as members of the committee.
Then managers at the firm's U.S. subsidiary Westinghouse said that management was exerting "inappropriate pressure" regarding a business acquisition.
Business and Industrial Strategy Secretary Greg Clark said he "welcomed the continued commitment of the Nugen consortium to the Moorside project", but it is far from clear what steps the the government might have to take, and whether it will be prepared to take them, to ensure the project goes ahead. Stricter safety standards after the 2011 Fukushima nuclear accident in Japan added to the cost of plants in China and the U.S.
Toshiba is building reactors at the Virgil C. Summer nuclear station in SC and the Alvin W. Vogtle nuclear plant in Georgia. The company is only paying Westinghouse once certain construction milestones are hit.
Toshiba itself has been more ambiguous.
According to Toshiba, there were design changes and additional safety measures required to comply with aircraft crash protection in the plants' design, and design changes delayed the combined license's issuance until January 2012. Toshiba later said it had asked regulators to allow it to delay the release of its earnings and details of the nuclear writedown by a month while it investigates possible managerial wrongdoing at its USA subsidiary, Westinghouse Electric.
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