Toshiba Corp. said Monday it will spin off four key operations, including its infrastructure systems, to keep its shaky financial standing from affecting its healthy businesses.
Roughly 24,000 of about 30,000 Toshiba employees are likely to be transferred to the newly established companies, but engineers in the research and development division and some administrative staff will remain Toshiba employees.
The company is planning to spin off its infrastructure systems, energy systems, information technology-related businesses and electronic device operations.
Toshiba’s financial problems are clouding prospects for a renewal, coming up in December, of a government permit that allows the company to undertake large-scale construction projects, according to sources familiar with the matter. Such permits are revoked if companies cannot meet capital and other financial requirements.
It is understood Toshiba hopes to avoid losing large infrastructure building and energy system contracts by separating the key business divisions from the parent company.
It also wants to ensure that it will continue to be involved in decommissioning the crisis-hit Fukushima No. 1 nuclear power plant which was devastated by tsunami following the March 2011 Great East Japan Earthquake.
The company is aiming to get the plan approved at a shareholders meeting in late June and spin off three divisions in July and the energy system division in October.
Toshiba is in the midst of a severe financial crisis caused by losses at U.S. nuclear unit Westinghouse Electric Co., which filed for Chapter 11 bankruptcy protection last month. Toshiba has already sold its medical business and spun off its chip operation.
The company said last month it could post a group net loss of ¥1.01 trillion for the fiscal year ended March 31, the largest ever loss for a Japanese manufacturer, and fall into a negative net worth of ¥620 billion due to losses at the U.S. nuclear power business.
To reduce the impact of the losses, Toshiba is selling off its memory chip business. Several bidders have raised their hands, and in the latest development, U.S. investment fund Kohlberg Kravis Roberts is reportedly planning a joint bid with the state-backed Innovation Network Corp. of Japan and the state-owned Development Bank of Japan.
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