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On Thursday, Toshiba Corp of Japan announced an asset sale worth $5.9 billion and a huge investment in its chip business. However, a report indicating that its account pertaining to the Westinghouse nuclear power unit were under investigation by the US authorities led to a decline in its share price. The $1.3 billion accounting scandal created a lot of problems for the electronics conglomerate and it is ready to put it in the past and focus on streamlining its bloated businesses whose poor performances have been covered through false bookkeeping. Masashi Muromachi, the chief executive at Toshiba has already made the announcement of more than 10,000 job cuts.
A new business strategy will be unveiled by the company on Friday, but for now, the CEO is most likely going to have to answer questions about the fallout from their accounting problems and issues. A case is being opened by the US authorities on Toshiba even though an investigation into the company has already been conducted in Japan. Nonetheless, jurisdiction can be exerted because US based Westinghouse is involved in the case. It was also reported that the possibility of fraud is also being investigated by the US Justice Department and Securities Exchange Commission. Toshiba said that it was taking a look at the report.
The share price of Toshiba was down by 8% due to the report. Moreover, it comes on the heel of the company’s announcement this week that it has discovered seven previously unknown accounting errors. In fact, there has also been controversy relating to the sale of its medical unit to Canon Inc., the imaging firm. Toshiba is hoping this sale will provide the necessary funds it requires for the purpose of restructuring. The unit has been transferred by Toshiba to a special-purpose company for completing the sale. Toshiba is the second-largest manufacturer of CT scan machines and also makes diagnostic equipment.
While this move is undoubtedly unusual, it could give Toshiba the opportunity of booking the sale in the current business year even if there is scrutiny from anti-competition watchdogs. A statement had been issued by Fujifilms Holding Corps, a rival bidder, in which it complained about the way the sale had been handled by Toshiba stating that it had mocked the anti-monopoly laws. However, it didn’t say if any legal action would be taken. Toshiba will be able to use the funds from the deal to eliminate its plans for seeking additional loans worth $1.8 billion from its banks.
The company is after securing fresh funds so it can focus its resources on its primary businesses, which are nuclear power and semiconductors. On Thursday, the Japanese firm also unveiled plans for investing $3.2 billion for building a new semiconductor facility as it wishes to remain competitive in the flash memory market. The facility will be built in three years. The company will also sell its white goods business, which has earned a revenue of about 225 billion yen in the previous financial year. Terms of the deal haven’t been finalized as yet.
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