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Toshiba in turmoil

US activist fund to propose Toshiba board revamp

Key investor calls for replacing majority of directors to restore 'crown jewel' status

"Toshiba cannot afford complacency at any level," King Street Capital wrote in a letter to the company's top executive.

TOKYO -- U.S. activist hedge fund King Street Capital Management plans to nominate a slate of independent directors to replace a majority of the board at Toshiba, in which it holds a stake of about 5%.

King Street intends to make the proposal at the troubled Japanese conglomerate's annual general meeting in June, the fund said on Monday.

The hedge fund, one of the largest Toshiba shareholders, said the candidates would include its co-founder, Brian Higgins. It did not announce any other names but said they would "include seasoned industry executives, investors and turnaround experts" with the necessary skills for "unlocking Toshiba's inherent value for the benefit of all stakeholders and returning it to its rightful place as a crown jewel of corporate Japan."

Toshiba, which has 12 directors, is in the process of crawling out of a financial hole. This prompted it to sell off semiconductor unit Toshiba Memory, and it is racing to come up with a new growth driver.

The fund also revealed that it sent a letter to Nobuaki Kurumatani, Toshiba's chairman and chief executive, to explain its actions. "Toshiba cannot afford complacency at any level," the fund wrote. "It needs a board that has the experience to guide the company's efforts to fully maximize its industrial strengths and empower the innovative potential of its employees. The board must provide a renewed sense of urgency, assertive decision-making and a profitable growth mindset to unlock Toshiba's value."

This April, Toshiba is to officially start a new midterm business plan -- the Toshiba Next Plan -- which features a mix of selling or winding up high-risk businesses, cutting costs and laying out growth strategies.

But King Street appears to be questioning Toshiba's ability to see the plan through under the current board members.

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