TOKYO – Toshiba shares fell on Friday to almost 8 percent at the Tokyo Stock Exchange after state media reported that the company plans to make a capital increase should the sale of its chip business get delayed.
At 1:02 pm, shares of the Japanese electronics and infrastructure company listed since August in the second section of the TSE fell 4.79 percent and stood at 298 yen ($2.63), although they collapsed 7.98 percent during the first half of Friday’s trading session.
Investors thus responded to the information published by state broadcaster NHK, which reported on Friday the plan of Toshiba’s management to undertake a capital increase of almost 600 billion yen partially financed by third-party investments.
The measure is destined to bail out the company in case the sale of its chip business, which has yet to receive the approval of the Japanese Competition Authorities, is delayed.
The Tokyo-based company is “considering raising money through a third-party allocation of new shares and public stock offerings. They’re now in talks with their main creditor banks,” NHK reported.
In response to this information, Toshiba published a statement on Friday saying the company is “considering capital strategy options to respond to changing circumstances, but no decision on capital strategy options has been made as of today.”
In September, Toshiba reached a sales agreement to sell its splinter chip branch with an international consortium led by United States investment fund Bain Capital, which also includes Apple, Dell and South Korean chipmaker SK Hynix.
The sale of Toshiba’s NAND flash memory business – second in terms of market share after Samsung – seeks to obtain liquidity and avoid bankruptcy of the Japanese multinational because of the heavy losses incurred by its nuclear energy operations in the US.
The chip business sale does not have yet the approval of the competition authorities and Toshiba’s disagreements with its US business partner, Western Digital, have also delayed the operation, which is expected to be completed by March 31, 2018 to safeguard shares of the Japanese company.