The fate of struggling giant Toshiba remains up in the air and, as industry watchers have observed, a key determinant to the electronics conglomerate’s survival is whether it will be able to remain listed on the Tokyo Stock Exchange.

The current reconstruction plan for Toshiba, which shoulders a massive financial burden tied to its U.S. nuclear unit Westinghouse Electric, is based on a premise that it can keep itself listed.

But Toshiba faces three risks that could overturn this premise:

Failure to submit annual financial reports by set deadlines.

Failure to eliminate negative net worth.

Failure to show improvement of internal management in an ongoing TSE probe.

“It will be unavoidable for Toshiba to be downgraded to the second section of the TSE. Losing the brand as a first-section company will make it harder to raise money. So, if it’s delisted, that’s going to largely affect (the turnaround plan),” Atsushi Osanai, a professor at Waseda Business School, said in an email.

If a firm listed in the first section ends a fiscal year with negative net worth, it will be downgraded to the second section, according to TSE rules. Toshiba reported a ¥540 billion negative net worth at the end of fiscal 2016.

“The negotiation process to sell the chip business seems to be rough, and there are still differences of opinions with the auditing firm. Thus, the risk of being delisted, since it is unable to file the annual financial report or clear the negative net worth, is quite possible,” he said.

Toshiba’s turnaround plan aims to make its social infrastructure business a new growth force, but it will need investment and it may be tough to attract cash from investors if it is delisted.

An immediate concern is the annual report that needs to be submitted to the Finance Ministry’s Kanto Local Finance Bureau by June 30, the legal deadline for companies operating under the April-March business year calendar.

It’s unlikely that Toshiba will make the deadline, as it has not been able to get approval on the fiscal 2016 financial results from its auditor PricewaterhouseCoopers Aarata.

The auditing firm has been taking time to review if the figures provided by Toshiba were credible because of the losses related to Westinghouse.

Toshiba has already said that it won’t be able to announce the official fiscal 2016 results at its annual shareholders meeting scheduled for June 28.

The firm is expected to ask the finance bureau for an extension to the deadline. If Toshiba is not permitted to buy more time, it must submit the report within a month or be delisted.

Another pitfall would be Toshiba’s failure to improve its financial status.

Toshiba posted huge losses from the fiasco at Westinghouse, which filed for Chapter 11 bankruptcy protection after it faced massive cost overruns derived from construction delays for AP1000 reactors in Georgia and South Carolina.

A TSE rule stipulates that if listed firms end two consecutive business years with a negative net worth, they will be delisted.

For Toshiba, selling its flash memory business, which the firm says is worth close to ¥2 trillion, may well be the last resort to eliminate the negative net worth within the fiscal year.

“Toshiba’s blueprint for reconstruction is to sell the flash memory business and to make its social infrastructure businesses as a main pillar,” said Toshiro Sato, director at Kyokuto Securities Research Institute.

If Toshiba cannot sell the chip business, the firm probably won’t have the necessary cash — unless it sells some social infrastructure businesses which would ruin the blueprint, Sato said.

The sales process is not going smoothly.

Toshiba spun off the flash memory unit to establish Toshiba Memory Corp. in April and started accepting bids for stakes in the business. Several overseas firms including U.S. investment fund Kohlberg Kravis Roberts, U.S. chip-maker Broadcom and Taiwan’s Hon Hai Precision Industry, have emerged as bidders.

But Western Digital, a U.S. firm that operates a chip factory in Mie Prefecture with Toshiba, has been trying to block the sale to other firms. Last month, Western Digital said it took the matter to the International Chamber of Commerce to seek arbitration.

Western Digital reportedly offered ¥2 trillion to Toshiba to acquire the flash memory business, but Toshiba is reluctant to make a deal with Western Digital. This is because Toshiba and Western Digital have the second- and third-biggest shares in the flash memory market, so the acquisition by Western Digital would prompt time-consuming antitrust examinations that could make it tough for Toshiba to sell the business by March.

Western Digital has reportedly made some concessions, such as not seeking to secure a majority stake, but the situation remains uncertain, some analysts said.

“Due to a conflict with Western Digital, it is unclear if Toshiba can sell the business in time” and get cash to solve the negative net worth problem, Sato said.

Moreover, the industry ministry doesn’t want to see Toshiba sell the chip unit to overseas firms, especially Chinese or Taiwanese bidders, owing to intellectual property concerns. This further limits Toshiba’s options.

Osanai of Waseda University said it is essential to speed up the sale of the flash memory unit because the business requires a massive investment to maintain its competitiveness.

“If the sale is delayed, Toshiba Memory’s competitiveness and value will be damaged. That would be a total loss,” he said.

Toshiba said last week that it aims to decide on a bidder by the June 28 shareholders meeting.

Another path to delisting involves TSE giving Toshiba the boot.

Toshiba’s stock has been placed under special monitoring alert because of an accounting scandal in which the firm padded its profits. The Japan Exchange Group, which operates the TSE, is conducting a probe to assess whether Toshiba’s internal management has shown improvement.

If internal management has not improved, the TSE will delist Toshiba.

But analysts doubt that the TSE will really make such a decision given Toshiba’s size and impact on society.

In a Reuters survey of 223 firms in May, 58 percent responded that the TSE should be “careful” about delisting Toshiba due to factors like a negative effect on the economy.

The TSE’s decision will be based on a quite subjective view, so “I assume that the TSE doesn’t want to pull the trigger by itself,” Sato said.

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