It would be hard to imagine a worse crisis for Toshiba, one of Japan’s
largest and most storied corporations.
The company said it planned to take a $6.3 billion write-down related to a
construction company that its nuclear power division acquired in 2015.
The Washington Post reported that the Toshiba, which employs close to 200,000 workers, might
have to file for bankruptcy.
Toshiba executives planned to share fourth-quarter earnings on Tuesday, but
the report never came. Officials claimed that they weren’t ready, and asked
for an additional month to file.
That’s when things went from bad to worse: The company’s chairman,
Shigenori Shiga, announced he was taking responsibility for the company’s
woes and would step down Wednesday.
The problems started in 2006, when Toshiba acquired a majority stake in
United States-based nuclear power provider Westinghouse for $5.4 billion.
That acquisition has largely turned out to be a failure.
How to break bad news to staff and take tough questions head-on.]
The New York Times reported:
Westinghouse faces spiraling cost overruns at nuclear plant projects in the
United States, and Toshiba said on Tuesday that it would like to sell all,
or part, of its controlling stake in the company. Previous efforts to
offload a portion of its shares in the subsidiary have failed, however.
Westinghouse was behind the acquisition of a U.S. construction company,
CB&I Stone & Webster, in 2015. The company completed much of
Westinghouse’s contract work, and it was recently revealed that the company
routinely ran delays and cost overruns on projects. The acquisition has led
to the $6.3 billion loss.
The spotlight is on additional executives, and the company is launching an
internal investigation to find potential inappropriate conduct in relation
to the acquisition.
“I apologize from the bottom of my heart for causing such major troubles
for shareholders and investors,” Toshiba’s president, Satoshi Tsunakawa,
Highlighting the scale of its financial concerns, Toshiba also ramped up
plans to raise cash, announcing it would consider selling most, even all,
of its stake in its prized flash-memory chips business. Shares traded down
around 10.3 percent in late morning trade.