Toshiba Corp. is considering spinning off more key operations such as infrastructure systems to keep its shaky financial standing from affecting its healthy businesses, people familiar with the matter said Tuesday.
Its financial problems are clouding the prospects for a renewal in December of a government permit that allows Toshiba to undertake large-scale construction projects, according to the sources. Such permits are revoked if companies cannot meet capital and other financial requirements.
Toshiba is in the midst of a severe financial crisis caused by losses at its nuclear power business. The company has already sold its medical business and spun off its chip operation as part of broad restructuring.
Toshiba hopes to avoid losing large infrastructure building and energy system contracts by hiving the operations off into separate entities, the sources said.
Most employees will be transferred to the newly spun-off companies. Engineers in the research and development division and administrative staff will remain employees of Toshiba.
Meanwhile, a state-backed turnaround fund may invest in Toshiba’s memory chip company, the head of the fund said Tuesday.
The Innovation Network Corp. of Japan is “studying the case based on published information,” Chairman Toshiyuki Shiga said at a news conference.
The INCJ set up a study team to look into the chip company and will “proceed if (the case) meets our strict investment criteria,” he said.
Toshiba is seeking to sell a majority stake in the company that it established by spinning off its chip division in an effort to raise cash following huge losses at U.S. nuclear unit Westinghouse Electric Co.
Toshiba closed the first round of bidding for the stake in the chip company, Toshiba Memory Corp., late last month and is likely to select the winning bid around July.
The government is keen for Japanese suitors to submit a joint bid as it is concerned Toshiba’s key technology could get into the hands of a foreign company deemed risky to national security. But no Japanese entities have participated in the bidding.
“Nothing has been decided,” Shiga said. But “(we) will continue to closely watch the situation.”
If the INCJ decides to invest in the chip company, Shiga said the fund “will not be able to do so alone” and will look for partners to make a joint bid.
He ruled out the possibility of investment for the purpose of bailing out of Toshiba, which expects to post a group net loss of ¥1.01 trillion ($9.3 billion) for the past year to March 31.
Taiwan’s Hon Hai Precision Industry Co., which bought Japanese display maker Sharp Corp. last year, has submitted the highest bid of nearly ¥3 trillion for Toshiba Memory, sources close to the matter said earlier.
The INCJ, with ¥2 trillion in funds, has so far invested a total of ¥984.6 billion in 114 projects, including chip maker Renesas Electronics Corp. and liquid crystal display maker Japan Display Inc.
The INCJ has also invested in areas including self-driving technology and artificial intelligence.