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    6502   JP3592200004

TOSHIBA CORPORATION

(6502)
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Delayed Japan Exchange  -  01:00 2022-11-25 am EST
4706.00 JPY   -1.18%
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S&P downgrade warning sends Toshiba shares falling

02/17/2017 | 05:27am EST
Logo of Toshiba Corp is seen behind a traffic signal at its headquarters in Tokyo

TOKYO (Reuters) - S&P Global Inc (>> S&P Global Inc) said in a report on Friday it could cut its rating of Toshiba Corp (>> Toshiba Corp) credit by several notches should the Japanese firm receive financial support that includes debt restructuring, sending Toshiba stock down 9 percent.

TOKYO (Reuters) - S&P Global Inc (>> S&P Global Inc) said in a report on Friday it could cut its rating of Toshiba Corp (>> Toshiba Corp) credit by several notches should the Japanese firm receive financial support that includes debt restructuring, sending Toshiba stock down 9 percent.

S&P rates Toshiba credit as junk, at CCC+, following downgrades in December and January, after the conglomerate flagged a multi-billion dollar writedown in its nuclear power business. The credit-rating firm expects banks to help Toshiba, including by extending deadlines for loan repayments.

Any further downgrade would prompt banks to charge Toshiba even higher rates for credit, at a time when the conglomerate is dealing with the crippling writedown while still working to recover from a financial scandal in 2015.

"If any financial support includes debt-to-equity swaps or changes in loan conditions, we would consider that as selective default," S&P Global analyst Hiroki Shibata said in a telephone conference later on Friday. "In that event, we might cut its rating by several notches."

Shibata drew comparison with Sharp Corp (>> Sharp Corporation). In 2015, S&P rated the panel maker's debt 'selective default' after it agreed a 200 billion yen ($1.76 billion) debt-to-equity swap with main lenders Mizuho Bank Ltd [MZFGAE.UL] and Bank of Tokyo Mitsubishi UFJ Ltd.

The next day, S&P raised the rating to junk, at B-, expecting the bailout to strengthen Sharp's finances. But five months later, S&P cut the rating further into junk, to CCC-, as Sharp's main business failed to improve.

On Thursday, Sumitomo Mitsui Financial Group Inc's (>> Sumitomo Mitsui Financial Group, Inc.) banking unit - one of Toshiba's main lenders - said it would provide the conglomerate with as much support as possible. The other main lender is Mizuho Financial Group Inc (>> Mizuho Financial Group, Inc.).

A day earlier, Toshiba executives asked creditors for an extension of a waiver for a loan covenant violation until the end of next month, people familiar with the matter told Reuters.

S&P's Shibata on Friday also said the credit-rating firm was closely watching Toshiba's likely sale of its chip business.

Toshiba initially planned to sell less than 20 percent of its NAND flash memory unit, but is now considering selling most or all the business some time after March 31, a person with knowledge of the matter told Reuters.

The chip business is cyclical and capital intensive but currently generates stable profit, so its sale could essentially be negative for Toshiba, Shibata said.

A Toshiba spokesman said the firm is not in a position to comment on the assessments of credit-rating firms.

Separately, Toshiba said in a stock exchange filing on Thursday that it would buy 3 percent of U.S. nuclear power subsidiary Westinghouse Electric Co LLC from IHI Corp (>> IHI Corp) for $157 million, after the Japanese infrastructure firm exercised an option to sell.

The multi-billion dollar writedown in Toshiba's nuclear business stemmed from a unit owned by Westinghouse.

($1 = 113.4300 yen)

(Reporting by Junko Fujita and Tim Kelly; Editing by Clara Ferreira Marques and Christopher Cushing)

By Junko Fujita


ę Reuters 2017
Stocks mentioned in the article
ChangeLast1st jan.
IHI CORPORATION 1.46% 3485 Delayed Quote.50.48%
MITSUI & CO., LTD. 0.07% 4053 Delayed Quote.48.82%
TOSHIBA CORPORATION -1.18% 4706 Delayed Quote.-0.51%
US DOLLAR / JAPANESE YEN (USD/JPY) 0.36% 139.1 Delayed Quote.20.45%
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Analyst Recommendations on TOSHIBA CORPORATION
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Financials
Sales 2023 3 322 B 23 859 M 23 859 M
Net income 2023 179 B 1 288 M 1 288 M
Net Debt 2023 296 B 2 125 M 2 125 M
P/E ratio 2023 11,6x
Yield 2023 6,16%
Capitalization 2 036 B 14 624 M 14 624 M
EV / Sales 2023 0,70x
EV / Sales 2024 0,69x
Nbr of Employees 116 224
Free-Float 95,2%
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Mean consensus HOLD
Number of Analysts 7
Last Close Price 4 706,00 JPY
Average target price 4 965,00 JPY
Spread / Average Target 5,50%
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Managers and Directors
Taro Shimada President, Chief Executive Officer & Director
Masayoshi Hirata CFO, Head-Accounting & Finance Management
Keiichi Yumita Head-Information Systems
Yutaka Sata Head-Technology Planning, R&D Center
Hideaki Ito Head-Technology Planning, R&D Center
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