Toshiba Sheds Energy Assets -- WSJ
09 November 2018 - 7:02PM
Dow Jones News
By Kosaku Narioka
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 9, 2018).
TOKYO -- Toshiba Corp. said Thursday it would liquidate its U.K.
nuclear business and sell its U.S. natural-gas business, taking a
combined loss of nearly $1 billion.
The moves are intended to clear away legacy problems after
Toshiba went through waves of restructuring in the past three years
that included the bankruptcy of its former Westinghouse Electric
business in the U.S.
The U.K. business -- NuGeneration Ltd., known as NuGen -- had
sought to build what was planned as Europe's largest new nuclear
project in northwest England. The Moorside project stumbled amid
doubts about the economics of nuclear-power plants.
Toshiba also said it would begin a previously announced share
buyback of Yen700 billion ($6.2 billion) on Friday and complete it
within a year. Investors welcomed the timing of the buyback and
pushed Toshiba shares up 13% in Tokyo trading Thursday.
New York-based King Street Capital Management LP, which held a
6.5% stake as of an Oct. 12 filing, had called on Toshiba in
October to boost the repurchase to Yen1.1 trillion. Non-Japanese
investors held about 72% of shares as of March 31.
Nobuaki Kurumatani, a former banker who took over as Toshiba's
chief executive in April, said he might consider raising the amount
in the future if the company's cash position improves.
Thursday's restructuring moves came after Toshiba sold many of
the businesses that used to be associated with its brand name,
including personal computers, television sets and medical
devices.
Releasing a new business plan, Mr. Kurumatani said Toshiba was
still competitive in many technologies such as batteries and hard
disk drives for data centers.
He set a modest growth target, saying the company wanted revenue
to rise past Yen4 trillion in five years from Yen3.6 trillion
projected for the current year ending in March. He said the company
wouldn't chase big acquisitions.
Toshiba completed a Yen2 trillion ($17.6 billion) sale of its
memory-chip unit in June to a group led by U.S. private-equity firm
Bain Capital LLC, which gave it the leeway to write off troubled
energy investments.
Mr. Kurumatani said Toshiba's spending previously focused on the
memory business and "we failed to invest adequately in the
businesses that will surely yield profits if we invest there."
Toshiba said it would record a loss of Yen93 billion connected
to the planned sale of the U.S. liquefied natural gas business to
China's ENN Ecological Holdings Co. and an additional Yen15 billion
for the NuGen liquidation in the U.K. Together those losses added
up to nearly $1 billion but the company still expects to record a
net profit of around $8 billion this year thanks to gains from the
chip-unit sale.
Toshiba's chief financial officer, Masayoshi Hirata, said the
Chinese company offered by far the best bid for the LNG business,
which involved a 20-year commitment in LNG trading, an area Toshiba
doesn't consider core. Mr. Hirata said he believed the deal was
likely to go through despite higher hurdles recently for Chinese
acquirers in the U.S.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
November 09, 2018 02:47 ET (07:47 GMT)
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