Toshiba Seeking to Sell Westinghouse Electric, But Not PC Business

Last week, financially strapped Toshiba Corporation of Tokyo, Japan, denied reports that it’s selling its PC business to AsusTek Computer, Inc., as reported by Japan’s Nikkei. However, the firm did state that its board of directors has decided to sell Toshiba’s bankrupt nuclear-power business, Westinghouse Electric Company.

According to Toshiba, such a move would allow it to reduce its resources for Westinghouse’s bankruptcy-rehabilitation proceedings, and enable Westinghouse to focus on cultivating new businesses.

Following Westinghouse’s filing of Chapter 11 bankruptcy protection in March 2017, Toshiba says that it successfully negotiated with the owners of the Vogtle project, and entered into a debt-settlement agreement in June 2017. The agreement sets the limit of Toshiba’s parent company guarantee obligation at U.S. $3.68 billion, and specifies that payments are to be made in installments from October 2017 to January 2021. In July 2017, Toshiba also successfully entered into a debt-settlement agreement with the owners of the V.C. Summer project, which sets the limit of Toshiba’s parent company guarantee obligation at U.S. $2.168 billion, and also specifies that payments are to be made in installments from October 2017 to September 2022.

Under its proposed deal, Toshiba has decided to fund Westinghouse’s debt obligations early, in the full amount – in part to avoid disadvantageous USD-Japanese currency exchange-rated fluctuations that could occur – and also to obtain the right to demand reimbursement from Westinghouse for Westinghouse debt that Toshiba would be paying.

The firm also states that its early payment of its share of Westinghouse’s debt would reduce the impact of taxes on its fiscal year that ends in March 2018, and help remedy its negative balance – the latter of which puts Toshiba in danger of being de-listed from the Tokyo Stock Exchange.

Last week, Toshiba also announced that it would be selling 95-percent its TV and visual-products subsidiary, Toshiba Visual Solutions Company, for 12.9 billion yen ($114 million) to Chinese company Hisense Electric Company.

According to Bloomberg News, Toshiba also plans to raise more money by bringing in more investors:

“David Einhorn’s Greenlight Capital, Daniel Loeb’s Third Point and other investors have agreed to buy 600 billion yen ($5.4 billion) worth of newly issued (Toshiba) shares, an extra cushion of cash on top of the already-agreed 2 trillion-yen sale of the Tokyo-based company’s chips business to a group led by Bain Capital.”

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