TOKYO -- Embattled Japanese conglomerate Toshiba on Friday announced its negative net worth for the year ended in March is now expected to widen to 581.6 billion yen ($5.2 billion). This is up from a forecast of 540 billion yen that was made in May. The company also announced it has gained approval to push back its annual securities report to August.
In a statement, Toshiba said its negative net worth widened "as the result of voluntary petition made under Chapter 11 of the U.S. Bankruptcy Code" by Westinghouse Electric, its former U.S. nuclear subsidiary. The company's net loss is expected to balloon to 995 billion yen.
The company was scheduled to file its annual securities report for fiscal 2016 by June 30, but auditor PricewaterhouseCoopers Aarata is still trying to determine when Toshiba realizes the loss at Westinghouse.
The company earlier in the day announced that its application to delay the filing of its annual securities report to Aug. 10 has been approved by the relevant authorities.
Also on Friday, the Tokyo Stock Exchange announced that Toshiba shares will be demoted from the exchange's first section.
"We tried our best to meet the deadline," Toshiba President Satoshi Tsunakawa told reporters in Tokyo, "but we have no choice but to delay it, and we are deeply sorry for the demotion."
The president added that "all the auditing except that related to Westinghouse is now complete," and the company will cooperate fully with the auditor to get its seal of approval and to file the securities report by the new deadline.
Massive losses from its U.S. nuclear unit plunged the once-mighty Toshiba into negative net worth in fiscal 2016. The company is now desperately trying to raise enough funds to save itself from remaining in negative net worth for a second year -- a scenario that would see the company face delisting from the TSE. On Wednesday, it decided to prioritize negotiations with a Japanese government-led alliance for the sale of its flash memory unit.
Any conclusion to the deal, however, faces obstacles. Bain Capital, the private equity firm in the alliance, is collaborating with South Korean chipmaker SK Hynix, making a protracted examination into antitrust matters a possibility.
In addition, Toshiba chipmaking partner Western Digital has sought an injunction against the sale in a California court. With the U.S.-based company weary of the involvement of direct rival SK Hynix, the government-led alliance will have to negotiate with Western Digital, either by asking it to drop the case or trying to include it in the consortium.
The formation of the alliance was mostly orchestrated by Japan's Ministry of Economy, Trade and Industry, which wants to keep Toshiba's sensitive chip technologies under domestic control. Tsunakawa said concerns about technology leakage through the consortium is misplaced, as SK Hynix will only provide funds to Bain and not have any voting rights in the memory unit.
"Toshiba and Western Digital have been good partners for a long time, and it is disappointing that we got to this stage," Tsunakawa said. "Toshiba isn't calling on Western Digital to join the consortium, but if it wants to, we will be willing to hold talks."