November 12, 2018
The OEM has announced various offloads and liquidations as it seeks to regain the confidence of investors.
Following on from last week’s release of its financial affairs, Toshiba has now also revealed that it is liquidating its British nuclear power unit, according to Reuters.
Furthermore, the OEM is also selling its US liquified natural gas (LNG) business to ENN Group, of China, as part of a new five-year business strategy that will see five percent of its workforce – 7,000 jobs – become redundant.
The announcement by the 143-year old company sent share prices surging, after a long period of uncertainly and distrust following its 2015 accounting scandal, which forced Toshiba to face up to huge overruns as Westinghouse – the company’s now-defunct US nuclear operation.
The consequences of this scandal forced the sale of Toshiba’s memory chip unit, to a Bain Capital-led consortium, and leaving the corporation “with few growth businesses.”
Reacting to the news, Hiroyuki Fukunaga, CEO at financial advice firm Investrust, said: “There had been reports about a possibility of selling non-performing business and job cuts so such moves had been expected at some point. But investors are taking heart; the share buyback announcement worth up to 40 percent of outstanding shares is definitely positive, too.”
Reuters argues that the OEM had been long-attempting to offload troubled assets “that could have exposed the Japanese company to future losses.” However, the cutbacks are described as “a blow to Britain’s plans to build a nuclear plant that was meant to provide 7 percent of the country’s electricity,” with the future of the Moorside, Cumbria site now up in the air. Similarly, South Korea’s state-run Korea Electric Power Corp, which was in talks to buy a stake in the disbanded nuclear unit, said it would be monitoring the liquidation process alongside the country’s Energy Ministry.
On the LNG front, meanwhile, Toshiba has reportedly “spent years trying to either sell the gas to power customers or offload the business,” after Asian LNG prices plunged 42 percent in the past five years.
As part of the offload, Toshiba will pay ENN Group $821 million (€728.8 million) “to assume its commitment to purchase 2.2 million tonnes per year of the fuel from Freeport LNG in Texas”, the company that Toshiba bought the unit from.
According to the OEM, these changes will “help it bolster its profitability in the longer run.”
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