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Business

Public-private fund to support Toshiba's restructuring

TOKYO -- Japan's industry ministry and a government-affiliated investment fund plan to help Toshiba overhaul home electronics and other operations, facilitating tie-ups with similarly ailing Sharp and others.

     The Innovation Network Corp. of Japan has begun talks with Toshiba on the specifics of an aid plan to be set by March.

     Their imminent challenge is to revamp the white goods business. Toshiba is thinking about merging the segment with its counterpart at Sharp or another Japanese home electronics manufacturer. The INCJ could invest in the company formed from the merger.

     Support could also go to help Toshiba restructure its nuclear power business. The company handles pressurized-water reactors, the global mainstream technology, through U.S. subsidiary Westinghouse and builds boiling-water reactors in-house. Toshiba hopes to find a partner for boiling-water reactors, the type that resulted in fuel rod meltdowns in the 2011 Fukushima nuclear disaster, and concentrate resources on pressurized-water reactors. 

     The industry ministry wants to see Toshiba team up with another Japanese builder so that reactor technology stays in-country. One potential partner is Hitachi-GE Nuclear Energy, a venture between Hitachi and U.S. company General Electric that constructs boiling-water reactors. The INCJ, overseen by the ministry, plans to get involved in a way that helps realize a partnership or merger.

Industry realignment

The government's rescue plans are part of a larger effort to realign Japan's electronics industry. Competition from Chinese and South Korean manufacturers wielding low prices has blighted businesses here in recent years.

     Sharp is a standout case, incurring a group net loss of 222.3 billion yen ($1.82 billion) for the year ended March 31. Toshiba looks to close its books deep in the red this coming March after a 90.4 billion yen operating loss for the April-September half due to flagging white goods, personal computer and other operations. The energy and infrastructure business fell into the red for the half as well, while profit from the semiconductor business plunged from the year-earlier level.

     The ministry is weighing a merger of Sharp's LCD panel operations with Japan Display, a domestic leader that is 36% held by the INCJ. "We could use this opportunity to prompt an industry realignment," a ministry official said. Supporting the restructuring of Toshiba's white goods business would further the effort.

     Toshiba hopes to have "contracts inked by the end of March" for restructuring deals with other companies, including a merger involving its PC operations and the sale of a medical products subsidiary, President Masashi Muromachi has said. But the proposals are still in the initial stages. For Toshiba and Sharp, both facing uncertain fundraising prospects, quick decisions may hold key to successful restructuring.

(Nikkei)

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