After releasing delayed third-quarter results with a disclaimer from its auditor, Japan’s Toshiba Corp’s CEO said on Tuesday that the company will make every effort to avoid being delisted by the Tokyo Stock Exchange.
“The decision on any delisting is for the stock exchange to make,” Satoshi Tsunakawa said at a press briefing in Tokyo. “We will do our utmost to avoid it.”
Increasing the likelihood that the nuclear-to-TVs conglomerate will be delisted and without an endorsement from its auditor, Toshiba filed twice-delayed business results on Tuesday.
A disclaimer saying that it was unable to form an opinion of the results was included in the filing from auditor PricewaterhouseCoopers (PwC) Aarata. The move puts the Tokyo Stock Exchange center stage as it weighs the pros and cons of forcing Toshiba to delist and is unprecedented for a major Tokyo-based firm.
a delisting would complicate the crisis engulfing the firm, increasing financing costs and exposing it to further lawsuits from angry shareholders but failing to act tough with Toshiba would bring into question authorities’ credibility in maintaining standards for investors.
Toshiba has been forced to estimate a $9 billion annual net loss and take drastic measures by massive cost overruns at four nuclear reactors under construction in the Southeastern United States ad and accountants have been questioning the numbers at U.S. nuclear subsidiary Westinghouse Electric.
Sources have said that PwC is probing the books at Westinghouse for the business year through March 2016 apart from questioning the recent results.
While Westinghouse has filed for Chapter 11 protection from creditors and may also be sold, Toshiba has put up its prized memory chip unit and other assets for sale.
An initial public offering for smart meter group Landis+Gyr was also being considered, the company also said on Tuesday. A potential $2 billion divestment of the Swiss-based business was being planned by the company, the media had reported last month.
The bourse has now the responsibility of taking the decision on whether to delist Toshiba or not. After failing to clear up concerns about its internal controls a year and a half after a 2015 accounting scandal, Toshiba has been on its supervision list since mid-March.
How long the bourse should take to come to a conclusion is not set by any rules.
The Wall Street Journal reported, citing people familiar with the matter that nearly $10 billion higher than Toshiba’s own estimate has been offered by Taiwan’s Foxconn has with up to 3 trillion yen ($27 billion) for the chip business.
As Japanese regulators have vowed to vet bidders to block a sale to investors it deems a risk to national security, such a proposal by Foxconn would also put them in a tough position. Because of its close ties to China, Foxconn is considered such a risk.
Not only for Japan’s growth strategy, but also in terms of jobs and information security, Toshiba’s chip technology was important, Japan’s trade minister Hiroshige Seko repeated on Tuesday.
“For those reasons, we continue to carefully monitor Toshiba’s business conditions and sale of its chip business,” Seko said.
(Adapted from CNBC)