Toshiba chief eyes equity financing as big loss looms
Toshiba President Satoshi Tsunakawa, right, and other executives meet the press on Dec. 27 in Tokyo.
TOKYO -- Toshiba's
president on Tuesday said the company will consider equity financing to
offset a possible multibillion-dollar impairment loss on a nuclear
power acquisition in the U.S.
President Satoshi Tsunakawa and two other executives held an evening news conference at the company's Tokyo headquarters to explain the financial predicament. The impairment loss means Toshiba may be staring at a net loss for the 2016 fiscal year, which ends in March. This could significantly dent shareholders' equity, which stood at 363 billion yen ($3.09 billion) as of the end of September.
Asked about the possibility of equity financing, Tsunakawa said, "We are considering measures including that."
The company said it is facing the impairment loss due to higher-than-estimated costs for nuclear plant construction projects, including materials and human resources. The increased cost projections mean Toshiba will book higher goodwill on the nuclear business that its U.S. subsidiary, Westinghouse, acquired from Chicago Bridge & Iron in December 2015. Originally, Toshiba estimated the goodwill at $87 million.
The company is "scrutinizing" the reasons for the increased costs and has yet to provide further details. The plan is to book the loss for the October-December quarter, for which results will be announced in mid-February. Toshiba said the cost estimate was provided by its partner construction company in the U.S.
At Tuesday's news conference, Tsunakawa said he is keenly aware of his responsibility. He also defended management over the acquisition decision: "We thought the acquisition would have higher merit than risk. We made a decision based on proper documents through a proper management process."
According to Toshiba, the nuclear projects would yield 2 trillion yen in revenue.
President Satoshi Tsunakawa and two other executives held an evening news conference at the company's Tokyo headquarters to explain the financial predicament. The impairment loss means Toshiba may be staring at a net loss for the 2016 fiscal year, which ends in March. This could significantly dent shareholders' equity, which stood at 363 billion yen ($3.09 billion) as of the end of September.
Asked about the possibility of equity financing, Tsunakawa said, "We are considering measures including that."
The company said it is facing the impairment loss due to higher-than-estimated costs for nuclear plant construction projects, including materials and human resources. The increased cost projections mean Toshiba will book higher goodwill on the nuclear business that its U.S. subsidiary, Westinghouse, acquired from Chicago Bridge & Iron in December 2015. Originally, Toshiba estimated the goodwill at $87 million.
The company is "scrutinizing" the reasons for the increased costs and has yet to provide further details. The plan is to book the loss for the October-December quarter, for which results will be announced in mid-February. Toshiba said the cost estimate was provided by its partner construction company in the U.S.
At Tuesday's news conference, Tsunakawa said he is keenly aware of his responsibility. He also defended management over the acquisition decision: "We thought the acquisition would have higher merit than risk. We made a decision based on proper documents through a proper management process."
According to Toshiba, the nuclear projects would yield 2 trillion yen in revenue.
