Banks press Toshiba for deal on memory unit sale this month
Lenders see August as final chance to end negative net worth in time
TOKYO -- Toshiba's main bank creditors have urged the embattled borrower to conclude a deal to sell its memory chip subsidiary this month to ensure the transaction is completed by the fiscal year-end next March, bringing in desperately needed capital
Sumitomo Mitsui Banking Corp., Mizuho Bank, Sumitomo Mitsui Trust Bank and other key lenders are committed to supporting Toshiba's cash flow. But their financial aid is predicated on Toshiba erasing the negative shareholders' equity caused by huge losses in its U.S. nuclear power business.
Toshiba had negative equity of 552.9 billion yen ($5.08 billion) as of March 31. It must bring its net worth into positive territory by the end of March 2018 to avoid delisting from the Tokyo Stock Exchange.
Considering the time required for a memory unit sale to win approval from antitrust regulators in various countries, the banks reckon that Toshiba needs to have an agreement on the sale this month in order to complete the deal in time.
Toshiba entered negotiations with its preferred buyer -- a consortium of Japanese, U.S. and South Korean names -- in June but reached an impasse. Still seeking a breakthrough, Toshiba also plans to hold new talks with chipmaking partner Western Digital, which opposes a sale without its consent.
If the Japanese group cannot sell Toshiba Memory, it could seek to float the unit in an initial public offering. But preparing for an IPO would take one to three years.
Only last week did Toshiba submit its much-delayed annual report for fiscal 2016, after its auditor granted conditional approval to its books.