Toshiba planning spinoffs of new key operations
Troubled conglomerate preparing for life after memory sale
TOKYO -- Toshiba is solidifying plans to create separate companies for four major business areas, aiming to provide greater flexibility to operations that will be central to its new strategy after the sale of its cash-cow memory unit.
The spinoffs center on social infrastructure, including water treatment and railway systems; energy, including fossil-fuel power; electronic devices other than memory chips; and information and communications technology solutions.
The change would entail transferring some 20,000 employees to the new companies, equivalent to roughly 80% of the parent's current head count. Pay and benefits would be maintained at current levels for now. About 9,000 workers were moved to Toshiba's memory unit after the April 1 spinoff.
The Japanese conglomerate is expected to decide on a plan at a board meeting soon. Since this would entail splitting off major businesses, Toshiba will seek investor approval at a general shareholders meeting as early as late June. The parent would likely retain administrative functions and research facilities. Shifting to a holding company structure will also be considered.
A factor behind the possible move is a construction business license due to expire in December. Japanese law requires companies working on large-scale construction projects to meet certain fiscal health standards, including capital and shareholders' equity requirements.
But Toshiba's liabilities likely exceeded its assets by 620 billion yen ($5.7 billion) at the end of the fiscal year through March 31, due to massive losses related to U.S. nuclear unit Westinghouse Electric. As things now stand, the Japanese company would not meet the requirements to get its license renewed.
Toshiba could use spinoffs to deal with the situation, President Satoshi Tsunakawa said in a news conference April 11.