Toshiba Shareholders OK Memory Biz Split

Chiba, March 30 (Jiji Press)--Shareholders of struggling Japanese electronics and machinery maker Toshiba Corp. <6502> on Thursday approved the company's plan to split off its lucrative flash memory business as a way to remedy its balance sheet. The approval was given at an extraordinary general shareholders meeting held at the Makuhari Messe convention center in the city of Chiba, east of Tokyo. Toshiba is aiming to generate about 2 trillion yen by selling the chip division, which earns about half of its operating profit. The firm's financial base has been marred by massive losses at its U.S. nuclear business unit Westinghouse Electric Co., which filed for Chapter 11 bankruptcy protection on Wednesday. The split-off entity will be relaunched as Toshiba Memory Corp. on Saturday. Toshiba plans to pick the buyer of a majority stake in the new company as early as May. At the beginning of the shareholders meeting, Toshiba President Satoshi Tsunakawa said, "I apologize for the trouble and concern" caused by the massive losses from the U.S. nuclear business. He said that Toshiba aims to improve its financial and capital bases through the withdrawal from the overseas nuclear business and the sale of the flash memory division. Tsunakawa then underscored the company's determination to quickly improve its earnings and overcome the present crisis by focusing mainly on its social infrastructure business. During the meeting, many shareholders harshly blamed the management for failing to prevent huge losses at Westinghouse while voicing concerns about the company's future after relinquishing its crown jewel flash memory business. Executive Officer Shigenori Shiga, who was head of Toshiba's nuclear business and stepped down as chairman in February to take responsibility for the huge losses, was absent from the shareholders meeting due to health reasons. Toshiba said Wednesday that its consolidated net loss in fiscal 2016, which ends on Friday, may reach 1.01 trillion yen and its end-March debts could top shareholder equity by 620 billion yen, following the bankruptcy of Westinghouse. Through the sale of the flash memory business, "We can wipe out the negative net worth during the next business year," which starts on Saturday, President Tsunakawa told shareholders. About 10 companies are believed to have notified Toshiba of their bids for the flash memory unit in the first-round tender that ended on Wednesday, informed sources said. The bidders are likely to include U.S. investment fund Bain Capital, South Korean chipmaker SK Hynix Inc., and Taiwan's Hon Hai Precision Industry Co., which acquired ailing Japanese electronics maker Sharp Corp. <6753> last year. The Development Bank of Japan and Innovation Network Corp. of Japan, both linked to the Japanese government, are now considering joining the race. END