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MarketScreener Homepage  >  Equities  >  Korea Stock Exchange  >  SK hynix, Inc.    A000660   KR7000660001

SK HYNIX, INC.

(A000660)
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Toshiba weighing options in case chip unit sale not completed by March

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10/24/2017 | 04:42am EDT
FILE PHOTO: The logo of Toshiba is seen as a shareholder arrives at Toshiba's extraordinary shareholders meeting in Chiba, Japan

CHIBA CITY, Japan (Reuters) - Toshiba Corp (>> Toshiba Corp) said it is considering various measures in case the $18 billion sale of its chip unit does not close by the end of the financial year and leaves the embattled conglomerate short of funds needed to ensure it stays listed.

CHIBA CITY, Japan (Reuters) - Toshiba Corp (>> Toshiba Corp) said it is considering various measures in case the $18 billion sale of its chip unit does not close by the end of the financial year and leaves the embattled conglomerate short of funds needed to ensure it stays listed.

The deal needs to close by end-March or Toshiba will likely report negative net worth - where liabilities exceed assets - for a second year running. That could trigger an automatic delisting from the Tokyo Stock Exchange.

"Nothing has been decided, but it's true that we are considering potential measures," CEO Satoshi Tsunakawa said at an extraordinary general meeting where shareholders approved the sale to a consortium led by Bain Capital LP.

Proceeds from the sale are crucial to cover billions of dollars in liabilities arising from the conglomerate's now bankrupt U.S. nuclear unit Westinghouse.

But a deal was only agreed last month after a long and contentious auction, and chances are high that it will not receive regulatory approvals by end-March as such reviews usually take at least six months.

Tsunakawa did not elaborate on what measures Toshiba may take but his comments follow the Tokyo Stock Exchange's decision this month to remove the firm from a special watchlist which had prevented it from issuing new shares on the market.

Analysts believe, however, that ordinary investors are unlikely to get behind a firm that lurched from a 2015 accounting scandal to a full-blown financial meltdown last year.

"It may issue preferred shares worth several hundreds of billions of yen to investors such as Bain Capital or it might ask its banks for debt-to-equity swaps," said Kentaro Harada, a credit analyst at SMBC Nikko Securities.

The sale of the unit - the world's No. 2 producer of NAND semiconductors - is also facing legal challenges from Toshiba's chip joint venture partner Western Digital (>> Western Digital), which opposes any deal without its consent and has sought an injunction with the International Court of Arbitration.

Toshiba said in a statement on Tuesday that it "remains fully determined to resolving the issue through the arbitration process."

Harada said that if Western Digital did gain an injunction order, that could harm banks' willingness to provide Toshiba with any further financial support.

In addition to the chip unit sale, shareholders also approved Toshiba's earnings report for the past business year and the appointment of 10 executives to the board, including Tsunakawa and seven other incumbent board members.

The earnings report has been controversial.

Filed in August after months of delays, it received an unusual "qualified opinion," or limited endorsement, from Toshiba's auditor, which said it thought Toshiba was late in booking losses at its Westinghouse unit. Proxy advisory firms Glass Lewis and ISS had recommended this month that Toshiba's shareholders should not give their approval given the auditor's mixed review.

Japan's securities watchdog is also investigating accounting in its earnings report to see if it properly handled losses incurred by its U.S. nuclear unit, a source with knowledge of the matter has said.

(Reporting by Makiko Yamazaki; Editing by Edwina Gibbs)

By Makiko Yamazaki

Stocks treated in this article : Toshiba Corp, SK Hynix Inc, Western Digital
Stocks mentioned in the article
ChangeLast1st jan.
SK HYNIX, INC. 13.40% 78700 End-of-day quote.7.81%
TOSHIBA CORPORATION 5.57% 2311 End-of-day quote.3.35%
US DOLLAR / JAPANESE YEN (USD/JPY) 0.30% 108.47 Delayed Quote.-1.14%
WESTERN DIGITAL 2.98% 43.51 Delayed Quote.-31.45%
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Financials (KRW)
Sales 2020 31 573 B
EBIT 2020 6 545 B
Net income 2020 4 752 B
Debt 2020 3 893 B
Yield 2020 1,56%
P/E ratio 2020 12,9x
P/E ratio 2021 6,17x
EV / Sales2020 1 813x
EV / Sales2021 1 407x
Capitalization 57 251 B
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Mean consensus BUY
Number of Analysts 37
Average target price 116 810,81  KRW
Last Close Price 83 700,00  KRW
Spread / Highest target 73,2%
Spread / Average Target 39,6%
Spread / Lowest Target 1,55%
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Managers
NameTitle
Seok-Hee Lee President, Chief Executive Officer & Director
Tae-Won Chey Chairman-Executive Board
Kwon Hong Managing Director & Head-Finance
Sang-Seon Lee Senior MD & Head-Production and Technology
Tae-Hoon Kim Managing Director & Head-Technology
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