Toshiba Corporation said it would consider a sale of Westinghouse but did not offer any clarity on whether it would proceed with a Chapter 11 filing for the U.S. nuclear unit – a move that could stem losses.
Toshiba’s failure to submit audited third-quarter earnings on Tuesday and its announcement of an expanded probe into Westinghouse also contributed to broad disappointment as did the Tokyo Stock Exchange’s placing of the stock on its supervision list.
Market participants said this action meant that Toshiba shares were now “untouchable” for institutional investors who cannot invest due to compliance reasons. Toshiba could be delisted if they are not satisfied with a report on internal controls that Toshiba submitted on Wednesday. The report, required since the 2015 accounting scandal, must also address internal control lapses since 2015, which includes a 6 billion dollar loss.
Crucial details about Westinghouse won’t be there in this report and Toshiba is already in trouble for delaying the filing of its quarterly earnings twice. Without a complete report, the exchange in Japan is unlikely to find its report satisfactory, said Fumio Matsumoto, a senior fund manager at Dalton Capital Japan.
Chief Executive Satoshi Tsunakawa sidestepped questions about a potential Chapter 11 filing for Westinghouse on Tuesday, saying only there were various options. Sources have said bankruptcy lawyers have been hired as an exploratory step.
Shares in the TVs-to-construction conglomerate slid 7.5 percent in early trade. They have plunged by more than half since December, slashing the company’s market value to $7.4 billion.
Masayuki Doshida, senior market analyst at Rakuten Securities, said too much uncertainty surrounded the firm.
“For how much can it sell the chip business? When will it release its earnings? Will it remain listed? And can it sell Westinghouse? We are just getting more questions,” he said.
Toshiba is planning to meet with creditor banks later today to explain the situation, sources familiar with the matter said.
