Shigenori Shiga, the chairman of Toshiba Corporation (TYO:6502) has said banks are willing to offer them conditional financial support.
This is critical for the business, especially after the recent disclosure of the multi-billion dollar writedown of their US nuclear business. The Toshiba stock has been battered in the stock market, with it coming down by almost 40 percent between December 26 and 29. It has rebounded somewhat since then, though. However, at 290.50 JPY, it is still trading way below the 443.0 JPY high of December 26.
The Tokyo-based business had purchased US nuclear business in 2015. However, it didn’t go smoothly according to expectations. Cost overruns there could mean a massive charge against profit, which can be as high as $4 billion. Actual size of the writedown is going to be finalized over the next few weeks. It could be a major blow to them if it eventually proves to be as high as $4 billion.
Toshiba Corporation Looking For Creditor Support
But Shigenori Shiga doesn’t seem to be worried about this, though the stock market is behaving differently.
Speaking to the press on Thursday, Shigenori Shiga said, “At this moment, I have been told that (banks) will continue to provide support”. He explained what conditional support means by saying that it would be based on Toshiba providing “solid explanations”. The company is at this time looking for support from creditors during key meetings over the next few weeks. This will help the business weather out the immediate financial blow.
The US nuclear writedown of December was not the only crisis for them in recent times. Toshiba is yet to fully recover from the huge $1.3 billion accounting scandal of 2015.
Banks Toshiba Has Been Approaching For Financial Support
Key creditors for the business include the Mizuho Financial Group, and Sumitomo Mitsui Financial Group. Satoshi Tsunakawa, the Chief Executive of Toshiba (TYO:6502), has been busy, visiting these banks last week.
But according to some reports, the creditors and not completely comfortable with the business, and its financial situation. Some bankers are believed to have expressed their frustration as there was supposed to have been a complete check-up of Toshiba’s financial health after the accounting scandal of 2015. That did not happen.
One senior bank executive commented, “Before we give them any financial help, it should come completely clean and have no surprises anymore”. In the end, however, they might still get the financial support the business needs.