Toshiba under pressure to consider ‘Plan B’ as chip sale falters

Toshiba under pressure to consider ‘Plan B’ as chip sale falters

TOKYO: As the US$18 billion sale of Toshiba Corp’s memory chip unit to a government-approved consortium falters, some bankers and potential investors are pressing the board to seriously consider alternatives, people with direct knowledge of the sale process said – including picking a new buyer.

Those people say Toshiba’s leadership is sticking to Plan A: selling the world’s second-largest memory chip maker to a Japanese government-backed group that also includes Bain Capital.

But the clock is ticking for Toshiba, which was still recovering from a US$1.3 billion accounting scandal in 2015 when it was hit by billions of dollars of cost overruns at its US nuclear unit Westinghouse in December.

Unless it closes a deal by March, a gaping balance-sheet hole will prompt automatic delisting of its shares from Tokyo’s stock market – further battering its shareholders. As questions emerge around the role of South Korean rival SK Hynix in the preferred bidder group, some Toshiba executives and officials at the company’s main creditor banks say they want top management to look at other options.

“Toshiba hastily picked the consortium ahead of its (June 28) annual shareholders meeting, but more and more flaws are emerging as time passes,” said a senior official at one of Toshiba’s banks.

SK Hynix, which was initially included just to help fund the deal, is now looking to own equity in Toshiba’s chips unit, according to sources, raising antitrust and national concerns in Japan. SK Hynix has not commented.

Addressing concerns that its chip technology could be handed to a foreign rival, Toshiba said previously that SK Hynix would have no equity or management influence. — Reuters