Nikkei Demotes Toshiba on Tokyo Stock Exchange; Faces Delisting

Signage for Toshiba Corp. is displayed atop the company’s headquarters in Tokyo, Japan

The Financial Times reports that Nikkei Inc. will demote financially beleaguered  Toshiba Corporation from the first tier to the second tier on the Tokyo Stock Exchange.

According to The Financial Times: “Toshiba faces an estimated loss of ¥995.2bn ($8.9bn) for the year that ended March 31. It has negative shareholder equity of ¥582bn, which means that its demotion is automatic. The company’s shares will be delisted if it remains in negative equity for two consecutive years.”

Toshiba, which has failed to report its full-year financial results in March as required, is seeking to cover billions of dollars in losses from its U.S.-based Westinghouse Electric,  which has sought bankruptcy protection, by selling its Toshiba Memory Corporation to a consortium of investors that consists of Innovation Corporation of Japan, Bain Capital Private Equity (South Korea), and the Development Bank of Japan. According to Reuters, the consortium’s bid cleared Toshiba’s 2 trillion yen ($18 billion) minimum.

Toshiba, split off Toshiba Memory Corporation in April 2017 as a wholly owned subsidiary, and the sale of the memory business is said to be essential in order for Toshiba to cover billions of dollars of losses from its now-bankrupt U.S. nuclear unit Westinghouse Electric.

However, Western Digital, a U.S.-based partner in Toshiba Memory Corporation, has filed a lawsuit seeking to block the sale; Toshiba in return has filed a lawsuit against Western Digital.

Last month, Toshiba received an extension to file its full-year earnings reports. Ultimately, if it  fails to file its full-year report very shortly, it faces delisting from the Tokyo Stock Exchange.

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