Company - - Jan 20,2017
Japanese conglomerate, Toshiba, experiences 16% dip in its shares after the reports of heavy losses at its US nuclear power business were announced.
It is speculated that Toshiba may have to write down the price of the unit by a larger-than-expected 700bn yen ($6.1bn).
Moreover, there are groundless reports stating that Toshiba is seeking aid from the government-assisted Development Bank of Japan (DBJ).
Toshiba said the precise writedown figure was not decided, and further declined to comment on the approach of DBJ.
Last year, the firm plunged into crisis when huge cost overruns were revealed on projects managed by a newly-bought company that constructs US nuclear power plants.
Toshiba's US operation, Westinghouse, compensated about $229m in 2015 for Stone & Webster, Chicago Bridge & Iron’s nuclear construction subsidiary.
However, on 27 December Toshiba accepted that it faced writedowns counting to several billion dollars. In a later announcement, it was indicated that the size of the writedowns would be between $1bn and $4.5bn.
On Thursday, the share price was down 26% at one stage and is now 50% lower as compared to when the writedown revelations emerged among fears that the company still doesn’t possess any firm control on the final costs.
According to news reports, Toshiba is assumed to have been in close link with its bank lenders regarding more financial support. It is also been stated that there would be more meetings this week with the prime banks.
Mana Nakazora, chief credit analyst at BNP Paribas said, “The key thing to watch here is whether Toshiba's liabilities will exceed its assets”. She further added, if that happens it will be hard for some banks to boost new funding.
In a statement released by Toshiba on Thursday, the company was still judging the scale of the writedown.