Toshiba names ex-banker as CEO, seen tackling opposition to chip unit sale

FILE PHOTO: A logo of Toshiba Corp is seen on a printed circuit board in this photo illustration taken in Tokyo July 31, 2012. REUTERS/Yuriko Nakao/File Photo

By Makiko Yamazaki and Taiga Uranaka

TOKYO (Reuters) - Toshiba Corp appointed a former banker experienced in dealing with distressed companies as CEO, and forecast its first annual profit in four years, helped by a buoyant chip business that it has agreed to sell.

Incoming CEO Nobuaki Kurumatani, 60, will be tasked with ensuring the smooth sale of the $18 billion chip unit - the world's No. 2 producer of NAND memory chips and the source of most of its earnings - to a Bain-led consortium despite opposition from some activist shareholders.

The sale, which will see Toshiba retake 40 percent of the unit, is aimed at putting the conglomerate back on a firmer footing after a year of crisis stemming from huge losses at its U.S. nuclear unit, and Kurumatani declared his first priority was bolstering the conglomerate's finances.

"Firstly, the issue is capital, to help capital recover quickly and return to global competition," he told a news conference.

Regarded as well-connected with politicians and bureaucrats, Kurumatani currently heads the Japanese arm of private equity firm CVC Capital Partners and before that was an executive at one of Toshiba's main lenders, Sumitomo Mitsui Financial Group (SMFG).

While at the bank, he was involved in arranging a government-led bailout plan for Tokyo Electric Power after the 2011 Fukushima earthquake and tsunami disaster.

"His appointment is designed to deal with the activist shareholders because there is no one at Toshiba with the experience to tackle this," said a financial source familiar with matter, declining to be identified as he was not authorized to speak to media.

Current CEO Satoshi Tsunakawa, who will become chief operating officer and be in charge of day-to-day operations, reiterated that the struggling conglomerate still intended to sell the unit.

Hong Kong-based activist investor, Argyle Street Management Ltd, a hedge fund with $1.2 billion under management, has opposed the sale, arguing that injections of fresh capital meant it was no longer necessary and that the board should consider an IPO instead. It says it has other investors on its side.

The appointment of Kurumatani, effective from April, comes as Toshiba seeks to recover from the worst year of its 142-year history.

Also helped by the sale of claims against now-bankrupt unit Westinghouse Electric Co LLC to a group of hedge funds, Toshiba predicted record net profit of 520 billion yen ($4.9 billion) for the financial year ending March.

That is up from a prior forecast of a 110 billion yen loss and much higher than a consensus estimate of a 188 billion yen profit.

The return to profit, combined with an additional 600 billion yen gained from the issue of new shares to overseas funds, will help Toshiba avoid falling into negative net worth for a second consecutive year, allowing it to remain a listed company.

The share issue has helped ease pressure to complete the sale of the chip unit by the end of March - a deadline it is widely viewed as unlikely to meet due to regulatory reviews in China.

If it doesn't complete the deal by then, it has the option of walking away, sources have said.

The chip unit, the subject of a long and hotly contested auction before the Bain-led consortium was finally chosen, has seen earnings surge on booming demand for semiconductors.

The unit is expected to book an annual operating profit of around 450 billion yen. By contrast, without earnings from the chip unit, Toshiba is expected to post zero operating profit.

($1 = 107.32 yen)

(Reporting by Makiko YamazakiEditing by Edwina Gibbs)

Must Read

Google's Duo app joins crowded field of video...

Aug 16, 2016

Google releases video calling app Duo in challenge to other popular services run by Apple,...

Gawker sold to Univision in aftermath of Hulk...

Aug 16, 2016

Spanish-language broadcaster Univision won an auction Tuesday for Gawker Media, which was put on...

Body donations on the rise at US medical schools

Aug 17, 2016

Many U.S. medical schools are seeing a surge in the number people leaving their bodies to science

Critics: Governor's promise to heal Baltimore...

Aug 17, 2016

Maryland Gov. Larry Hogan promised to help heal Baltimore when it erupted in rioting a year and a...

'Auction' of NSA tools sends security companies...

Aug 18, 2016

The leak of what purports to be a National Security Agency tool kit as part of a surreal online...

People also read these

Mississippi town mourns deaths of 3 couples in...

Aug 15, 2016

Three married couples killed in the crash of a small airplane in Alabama all lived in the...

Google's search engine directs voters to the...

Aug 16, 2016

Google is pulling another lever on its influential search engine in an effort to boost voter...

Grassley: FBI improperly restricting access to...

Aug 17, 2016

A Republican senator says the FBI is improperly restricting access to materials from its closed...

Railroads show little progress on key safety...

Aug 17, 2016

A government report shows many commuter and freight railroads have made little progress installing...

WHY IT MATTERS: Income inequality

Aug 18, 2016

The rich keep getting richer while more Americans are left behind

Weather, 20 December
Houston Weather

High: +11° Low: -2°

Humidity: 83%

Wind: NNE - 7 KPH

Canberra Weather

High: +27° Low: +17°

Humidity: 87%

Wind: W - 20 KPH

Roissy-en-France Weather

High: +6° Low: -5°

Humidity: 87%

Wind: ENE - 7 KPH

Florence Weather

High: +9° Low: +6°

Humidity: 97%

Wind: ENE - 17 KPH

Parga Weather

High: +16° Low: +4°

Humidity: 100%

Wind: SE - 25 KPH

About Us

Started in 2015, Science Of The World offers in-depth news about the latest scientific discoveries. If you’re looking for a reliable source, Science Of The World is the one for you.

Contact us:

Subscribe Now!