Toshiba’s chairman resigns as company looks to take $6.3M hit

It would be hard to imagine a worse crisis for Toshiba, one of Japan’s largest and most storied corporations.

The company said it planned to take a $6.3 billion write-down related to a construction company that its nuclear power division acquired in 2015.

The Washington Post reported that the Toshiba, which employs close to 200,000 workers, might have to file for bankruptcy.

Toshiba executives planned to share fourth-quarter earnings on Tuesday, but the report never came. Officials claimed that they weren’t ready, and asked for an additional month to file.

That’s when things went from bad to worse: The company’s chairman, Shigenori Shiga, announced he was taking responsibility for the company’s woes and would step down Wednesday.

The problems started in 2006, when Toshiba acquired a majority stake in United States-based nuclear power provider Westinghouse for $5.4 billion. That acquisition has largely turned out to be a failure.

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The New York Times reported:

Westinghouse faces spiraling cost overruns at nuclear plant projects in the United States, and Toshiba said on Tuesday that it would like to sell all, or part, of its controlling stake in the company. Previous efforts to offload a portion of its shares in the subsidiary have failed, however.

Westinghouse was behind the acquisition of a U.S. construction company, CB&I Stone & Webster, in 2015. The company completed much of Westinghouse’s contract work, and it was recently revealed that the company routinely ran delays and cost overruns on projects. The acquisition has led to the $6.3 billion loss.

The spotlight is on additional executives, and the company is launching an internal investigation to find potential inappropriate conduct in relation to the acquisition.

“I apologize from the bottom of my heart for causing such major troubles for shareholders and investors,” Toshiba’s president, Satoshi Tsunakawa, told investors.

CNBC reported:

Highlighting the scale of its financial concerns, Toshiba also ramped up plans to raise cash, announcing it would consider selling most, even all, of its stake in its prized flash-memory chips business. Shares traded down around 10.3 percent in late morning trade.

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