Toshiba Acts to Speed Sale -- WSJ
June 01 2017 - 3:02AM
Dow Jones News
By Mayumi Negishi
TOKYO -- Toshiba Corp. is undoing a spinoff of its joint venture
with Western Digital Corp. in its latest bid to accelerate the sale
of the Japanese technology giant's flash memory chip unit and
survive.
Toshiba, whose clients include Apple Inc. and Nintendo Co., said
it would transfer the joint venture back to the core Toshiba group,
and remove that part of its chip unit from a sale. The company says
the joint venture includes manufacturing equipment, but not the key
NAND flash manufacturing processes or the plants or engineers in
Japan.
The move defuses Western Digital's claim that the sale of the
chip unit to a third party would be a breach of its joint venture
rights, Toshiba's lawyers said in a letter dated Wednesday.
But Western Digital, which claims exclusive rights to buy the
chip unit, said in a statement the move doesn't resolve its
concerns. The U.S. chip maker, which has threatened to sue
Toshiba's banks and potential bidders, said it would continue to
seek arbitration to prevent a sale of the unit to a third party.
Arbitration could take a year to resolve.
The legal wrangle over the chip unit sale, which analysts say
could bring $20 billion or more and keep Toshiba afloat, is
alarming Toshiba's stakeholders and Japanese policy makers.
Toshiba's banks want signs the sale will proceed smoothly, and the
company has said it hopes to secure a buyer by the end of June.
Western Digital took over SanDisk Corp.'s stake in the chip
venture when it acquired SanDisk last year. It says it has the
right to block any effort by Toshiba to sell its chip unit because
of what it describes as its rights under Toshiba's contracts with
SanDisk.
Toshiba said that even if those rights exist -- a point it
disputes -- they would be triggered only by a sale of the assets
Toshiba now says it will hold on to.
"Toshiba is not -- and never has been -- in breach of any of the
agreements related to the JVs or its NAND flash manufacturing
business," the company's lawyers said in the letter. "This transfer
back, however, puts this matter to rest, to the benefit of our
process and stakeholders."
The much-needed sale of the chip unit would cover losses at
Toshiba's nuclear affiliate, Westinghouse Electric Co., which filed
for chapter 11 bankruptcy protection in March. Toshiba -- whose
liabilities continue to exceed its assets -- needs to complete the
sale by March to remain listed on the Tokyo bourse.
Besides Western Digital, bidders for Toshiba's chip unit include
Foxconn Technology Group of Taiwan, SK Hynix Inc. of South Korea
and U.S.-based Broadcom Ltd.
Toshiba is the world's No. 2 flash-memory maker after South
Korea's Samsung Electronics Co.
Toshiba said earlier Wednesday it won't be able to win auditors'
approval for its earnings results for the year ended in March by
its annual shareholders' meeting on June 28. If Toshiba is unable
to receive auditor approval by the end of June, it increases the
risk the Tokyo Stock Exchange finds its corporate governance
lacking and delists its shares. Toshiba's stock fell 3.4%.
Write to Mayumi Negishi at mayumi.negishi@wsj.com
(END) Dow Jones Newswires
June 01, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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