Toshiba Shares Decline on Risk of Another Earnings Delay

(Bloomberg) -- Toshiba Corp. shares fell as much as 9.4 percent on Monday after the struggling electronics conglomerate signaled that it may miss another deadline to release results for the last quarter of 2016.

It may be difficult to report figures by April 11, a Toshiba executive said last week. The Tokyo-based company has already delayed earnings twice, as it sought to assess a multibillion-dollar loss at Westinghouse Electric, its U.S. nuclear unit. Toshiba will be able to apply to the Tokyo Stock Exchange for another extension to the earnings deadline, but another delay could impact the exchange's review of the company's qualifications for remaining listed.

“They've already delayed it twice, so delaying it a third time is a negative,” said Hideki Yasuda, an analyst at Ace Research Institute. “What TSE is investigating now is if Toshiba's compliance improved after their accounting scandal a few years ago. And if it turns out that inappropriate pressure at Westinghouse resulted in this earnings delay, it could indirectly impact TSE's decision on delisting.”

Westinghouse, hit by cost overruns at U.S. nuclear projects, filed for Chapter 11 bankruptcy last week. As a result, Toshiba forecast that its annual loss could more than double to a record 1.01 trillion yen ($9.1 billion). To make up for the loss, the company has put its prized memory chip unit up for sale. Toshiba's stock, which is down about 20 percent this year, was down 4.9 percent at 230 yen at 9:40 a.m. in Tokyo.

Toshiba has received bids of up to 2 trillion yen for its semiconductor business, an executive said on Friday. The highest bid is for the entire unit, and bidders included individual companies as well as groups, said the executive, who asked not to be identified discussing a private matter.

Last week, when Westinghouse made the bankruptcy filing, it said in a statement that it obtained $800 million in debtor-in-possession financing to help fund the reorganization. The company has agreed with owners of its AP1000 reactor developments to continue the projects during an initial assessment period, and it will continue work in China, it said.

Toshiba listed as much as $10 billion debt for Westinghouse and another entity. The nuclear unit filed in U.S. Bankruptcy Court for the Southern District of New York and proposed to appoint Weil, Gotshal & Manges LLP as legal adviser, AlixPartners LLP as financial adviser, and PJT Partners Inc. as investment banker, subject to court approval.

To contact the reporter on this story: Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net.

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Reed Stevenson, Peter Elstrom