U.S. investment fund Bain Capital, whose consortium is set to acquire Toshiba's lucrative chip unit, will consider investing in Toshiba Corp. temporarily should the acquisition procedures fail to be completed by late March 2018, it has been disclosed.
The move is aimed at preventing Toshiba from being delisted from the Tokyo Stock Exchange (TSE) in the event the embattled electronics giant fails to bail itself out of excessive debts by the end of March next year.
Toshiba is hit by a capital deficit -- a situation in which its debts surpass its assets -- and faces the risk of delisting under TSE rules. In a desperate bid to avoid the worst scenario, Toshiba signed a contract to sell Toshiba Memory Corp. to a Japan-U.S.-South Korea consortium including Bain Capital and South Korean chip giant SK hynix Inc. for 2 trillion yen.
However, as the acquisition process involves anti-monopoly law screenings in the countries involved, it is unclear whether the process can be completed by the end of March 2018. Bain Capital decided that it will need to support Toshiba's management by helping it resolve the debt issue through investment in Toshiba as its delisting could affect the Toshiba Memory sale.
In an interview with the Mainichi Shimbun on Oct. 18, Bain Capital Japan chief Yuji Sugimoto pledged that his company will put all its efforts into completing the acquisition process -- in which clearing the apparently tough screenings in China will play a crucial role.
"We would like to fully cooperate with screenings while making the most of our networks in China," Sugimoto said.
With regard to Bain's plan to consider investing in Toshiba in case the chip unit acquisition screenings fail to be concluded in time, he said, "We will be able to provide our support (to Toshiba), though the ways to do it would depend on how long the screenings are delayed."
Sugimoto said Toshiba Memory President Yasuo Naruke will remain in office with the current management retaining leadership even after the chip unit's sellout. At the same time, Sugimoto said he and others will assume the position of outside directors to monitor the firm's management.
As for U.S. data storage giant Western Digital's legal dispute with Toshiba over the chip business sale, Sugimoto showed confidence in resolving the issue, saying, "We will be able to reach settlement by presenting conditions for a partnership."
Because Western Digital faces no immediate losses, Toshiba would have to pay, if at all, only a small amount of settlement money. "There would only be a limited impact on Toshiba's management," Sugimoto said.