Chinese chemicals maker ENN Ecological Holdings Co. is scrapping a plan to buy Toshiba Corp.’s liquefied natural gas operations in the United States, the Japanese firm has said.
The Chinese company notified Toshiba of its decision, citing “considerable uncertainty” partly caused by the delayed completion of the purchase, Toshiba said late Thursday.
The deal, initially planned to be wrapped up by the end of March, has yet to be completed due to the prolonged approval process of the Committee on Foreign Investment in the United States.
Toshiba said last November it would sell Toshiba America LNG Corp. to ENN Ecological for $15 million as part of its restructuring measures and would pay about ¥93 billion ($836 million) to the Chinese company, given the risk the business would be unprofitable with a future drop in LNG prices.
Toshiba had planned to book the payment as a special loss in the fiscal year that ended March 31 but will now estimate the impact of the cancellation of the deal on its earnings.
The company is in the midst of efforts to restore its footing after suffering huge losses in the U.S. nuclear power industry.
In 2013, the firm said it had signed a deal with a U.S. firm to secure rights to process U.S.-produced natural gas into 2.2 million tons of LNG annually over 20 years from 2019.
Toshiba aimed to procure the LNG for Japanese utility companies for power generation but LNG prices have since declined, making it difficult to make the operation profitable.