Toshiba seeking $8.8 billion for majority stake in chip unit - source

By Reuters
February 21,2017
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The logo of Toshiba Corp. is seen at the company's facility in Kawasaki, Japan February 13, 2017. REUTERS/Issei Kato/File Photo

TOKYO (Reuters) - Japan's Toshiba Corp wants to raise at least 1 trillion yen ($8.8 billion) by selling most of its flash memory chip business, seeking to create a buffer for any fresh financial problems, a source with direct knowledge of the matter said.

The beleaguered conglomerate's decision to abandon an initial plan to sell just 19.9 percent came at the instigation of its main creditor banks which are worried about potential writedowns that may come on top of $6.3 billion hit to its U.S. nuclear unit, separate financial sources said.

Prioritising its need to raise capital, Toshiba said last week it is now prepared to sell a majority stake or even all of its prized chip business - the world's biggest NAND chip producer after Samsung Electronics Co Ltd.

Toshiba has not decided on the size of the stake to be sold, preferring to focus on the amount that can be raised although it would like to retain a one-third holding that would give it a degree of control over the business, the source with direct knowledge said.

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," he said, adding that the sale should be completed by the end of March next year.

It wants to restart the sale process as soon as possible and may sell to multiple buyers rather than one bidder with interest already received from investment funds, other chipmakers and client companies, he also said.

A Toshiba spokeswoman said the company cannot comment on the specifics of the sale process. Sources declined to be identified as they were not authorised to speak to the media.

Other potential financial risks that Toshiba may have to deal with include Landis+Gyr AG, an unlisted German meter maker it acquired in 2011 and whose earnings have not matched expectations.

"Toshiba may have to take a writedown (for Landis) of more than 100 billion yen in the current financial year," an executive at one of Toshiba's main creditor banks said.

Toshiba's main banks include lenders such as Sumitomo Mitsui Financial Group Inc and Mizuho Financial Group Inc.

Asked about the potential for a writedown related to Landis at a news conference last week, Toshiba's Chief Finiancial Officer Masayoshi Hirata said the company currently did not expect to take a charge.

When Toshiba was offering 19.9 percent of its chip unit, it received offers ranging from 200 billion yen to 400 billion yen ($1.8 billion to $3.5 billion), a source has previously said.

Suitors at the time included rivals SK Hynix Inc and Micron Technology Inc, data storage firm Western Digital Corp and financial investors such as Bain Capital, sources said.

Western Digital is still interested in buying a stake in Toshiba, two sources said without specifying how big a holding it would be prepared to buy. The California-based firm and Toshiba jointly operate a NAND flash memory plant in Japan.

Toshiba's share ended 1.4 percent higher compared with a 0.7 percent gain in the benchmark Nikkei 225 index.

($1 = 113.4100 yen)

($1 = 113.5100 yen)

(Reporting by Makiko Yamazaki and Taro Fuse; Writing by Tim Kelly; Editing by Edwina Gibbs)