Toshiba Corp. is considering issuing preferred shares to raise ¥300 billion ($2.66 billion) to avoid falling into negative net worth when it books a huge write-down on its nuclear business, sources close to the matter said Saturday.
The industrial conglomerate might issue nonvoting preferred shares convertible to stock in the flash memory business it will spin off, the sources said.
Toshiba said in December that it could book an impairment loss of “several billion dollars” on its U.S. nuclear business. The losses could reach ¥700 billion, with Toshiba facing the risk of reporting greater liabilities than assets when it posts its business results for the year ending March 31.
Toshiba has said it will finalize the write-off by Feb. 14, when it reports earnings for the period from April to December.
Last week, Toshiba unveiled a plan to spin off its profitable chip business to raise money needed to offset the massive loss on its nuclear operation. It said it planned to sell a stake of less than 20 percent in the memory chip business.
Toshiba hopes to boost capital by linking the preferred shares to its profitable flash memory operation, as Toshiba is likely to find it difficult to sell shares in itself.
Toshiba will hold an extraordinary shareholders meeting at the end of March to finalize the spinoff and seek approval to issue the preferred shares.
Bidding for the stake in the chip business began Friday. Potential bidders include U.S. data storage company Western Digital Corp., a joint operator of Toshiba’s Yokkaichi flash memory plant, and foreign funds.
Canon Inc. had shown interest in investing in the new chip company but said this week it decided not to, and various funds also do not necessarily see it as a good deal.
Toshiba is looking to finalize the bidder and complete the capital increase by the end of March.
If the conglomerate falls into negative net worth at the end of the fiscal year in March, it will be downgraded to the second section of the Tokyo Stock Exchange.