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News Navigator: How is the sale of Toshiba's semiconductor unit going?

The headquarters of Toshiba Corp. is pictured from a Mainichi Shimbun helicopter in Tokyo's Minato Ward in this July 21, 2015 file photo. (Mainichi)

The Mainichi answers some common questions readers may have about Toshiba Corp.'s planned sale of its lucrative semiconductor unit, as part of its corporate restructuring plan.

    Recently, the Japanese firm decided to negotiate the sale of the unit to a consortium that includes the state-backed Innovation Network Corporation of Japan (INCJ). The expected sale amount is in the region of 2 trillion yen (about $17.7 billion U.S.).

    However, U.S. firm Western Digital Corp., which runs a semiconductor factory with Toshiba in Yokkaichi, Mie Prefecture, opposes the plan and has filed a request with the International Court of Arbitration to stop it. Western Digital has also asked a U.S. court to halt any sale-related procedures until a resolution is reached. Meanwhile, Toshiba has filed a lawsuit with the Tokyo District Court demanding Western Digital pay compensation for disrupting the sale process.

    Question: Can a conclusion to the Toshiba-Western Digital dispute be reached in court, and is there a hearing soon?

    Answer: Relevant parties will be questioned at a July 14 (U.S. time) court hearing in the U.S., and if the process goes smoothly, a conclusion will be reached on that day. If the court rules in favor of Western Digital, Toshiba will have no choice but to stop its plan to sell its semiconductor business to the INCJ consortium. If one party disagrees with the ruling, the issue will be appealed to a higher court. However, Toshiba's restructuring plans will face a rocky road even if the initial ruling is overturned in an upper court.

    Q: Why?

    A: At the end of fiscal 2016 (late March 2017), Toshiba was found to have liabilities exceeding the total value of its assets. The firm is aiming to get out of this difficult situation by bringing in cash through the sale of its semiconductor unit by March 2018. However, if court proceedings drag on, the company will not be able to sell off the unit this fiscal year.

    Q: What will happen?

    A: Trust in Toshiba will drop, and there is a concern that banks will refuse to keep lending to the electronics giant. In addition, the firm might be delisted from the Tokyo Stock Exchange and shareholders will no longer be able to buy and sell Toshiba shares freely. Related parties such as INCJ hope that Toshiba and Western Digital can reach a solution, but the future is uncertain. (Answers by Naoko Furuyashiki, Business News Department)

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