April 19, 2016 / 11:55 PM / 3 years ago

Toshiba preparing Westinghouse writedown, CEO to step down: sources

TOKYO (Reuters) - Japan’s Toshiba Corp is preparing to write down the value of its stake in U.S. nuclear subsidiary Westinghouse by around 200 billion yen ($1.84 billion), sources familiar with the matter said on Wednesday.

Toshiba Corp President and CEO Masashi Muromachi leaves a news conference at the company headquarters in Tokyo, Japan, March 18, 2016. REUTERS/Thomas Peter

The need for a writedown of Westinghouse had been suspected by investors in the light of the deterioration in the nuclear business’ fundamentals even after the company revealed accounting irregularities worth $1.3 billion. But the electronics conglomerate has refrained from taking the step so far.

Such a move now would indicate Toshiba is finally cleaning up its books as it goes about restructuring the laptops-to-nuclear conglomerate.

In another sign it was preparing to draw a line under the accounting scandal, a company committee met on Wednesday to discuss the resignation of Chief Executive Masashi Muromachi, said sources, who requested anonymity because they were not authorized to speak with media.

Muromachi had said that he wanted to step down after ensuring Toshiba was on track to recovery.

The Westinghouse writedown, to be posted for the financial year ended in March, would come on top of a 710 billion yen net loss forecast earlier by Toshiba for the same year.

Investors have been concerned for some time now that the value of Toshiba’s nuclear business, worth around 350 billion yen, was overstated. Nuclear power has become less popular since Toshiba’s investment in Westinghouse in 2006, especially in the aftermath of the 2011 Fukushima disaster.

The company had said last month that it was conducting a stress test to see whether it would need to write down its nuclear business. The Asahi newspaper had reported earlier that Toshiba was considering a 200 billion yen writedown for Westinghouse.

Given that any potential writedown and the extent of it has already been factored in by investors, Toshiba shares barely budged in Tokyo trading on Wednesday, ending up 0.2 percent, in line with the broader market.

On Wednesday, the company said it had not yet finalised results from the stress test. It declined to comment on Muromachi’s possible resignation.


The impact of the anticipated writedown on earnings is likely to be comfortably offset by a profit of about 590 billion yen from the sale of a medical equipment unit to Canon Inc.

The medical unit sale was part of a drastic business overhaul carried out by Muromachi, who took over Toshiba last July after his predecessor and a slew of other top executives resigned for their roles in the country’s biggest accounting scandal in years.

Muromachi has expressed a desire to step down as early as June, the Sankei newspaper reported earlier on Wednesday, without citing sources.

His successor is expected to be one of Toshiba’s three senior executive vice presidents, with Yasuo Naruke, who heads the core chip business, the likely front-runner, it said.

($1 = 108.9600 yen)

Additional reporting by Kentaro Hamada and Ritsuko Ando; Editing by Stephen Coates and Muralikumar Anantharaman

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