Toshiba Shares Crash After Write-Down Warning

TOKYO— Toshiba Corp. shares fell more than 20% on Wednesday, the utmost allowed for the day, after a warning about a multibillion-dollar write-down brought about investors to flee.

That followed a 12% decline on Tuesday after preliminary reports of the write-down. A news conference Tuesday evening via Toshiba executives exacerbated investor fears as a result of it left open the likelihood that the company’s web value might turn poor.

Toshiba stated the problem stemmed from value overruns at its U.S. nuclear subsidiary, Westinghouse electrical Co., which is constructing several reactors including two for energy utility Southern Co.

Westinghouse had been working on that undertaking with CB&I Stone & Webster Inc., a U.S. company that it bought a couple of 12 months in the past. Toshiba said it found out sudden inefficiencies in the labor drive on the newly obtained subsidiary that together with different components were riding up costs. Toshiba Chief govt Satoshi Tsunakawa said the issues would force the corporate to take a write-down estimated at a couple of hundred billion yen, or a number of billion dollars.

the corporate said it might free up the precise determine in February.

“It’s an unexpected development at a time when issues had been receding,” said Yoshinori Ogawa, strategist at Okasan Securities. Toshiba shares had surged in view that February on optimism about its semiconductor trade and expectations for stable web profit within the current fiscal year ending March 2017.

Toshiba shares fell 80 yen on Wednesday—the maximum drop for in the future beneath inventory-trade ideas—to ¥311.6. A Toshiba spokesman declined to comment on the inventory-worth move.

Tuesday’s news brings the point of interest again to Toshiba’s shaky stability sheet, which took a huge hit final fiscal year when the corporate stated it had improperly padded its outcomes for years. prime management was replaced after the accounting scandal.

As of Sept. 30, the corporate had ¥363 billion ($ three.1 billion) in capital, representing simply 7.5% of belongings—a thin cushion in opposition to surprising shocks. If the write-down is in the higher range of estimates, it might probably wipe out Toshiba’s capital and depart it with bad net worth.

requested at the news conference about the potential of falling into terrible net value, Toshiba executives declined to rule it out.

Toshiba is already on a Tokyo stock trade watch record as a result of the accounting scandal. That makes it difficult to lift funds by means of issuing new shares. inventory-trade principles call for a corporation to be delisted if it falls into bad web price at the finish of its fiscal 12 months and fails to repair the placement within a year.

Toshiba executives stated they might ask the corporate’s banks for fortify. Toshiba already sold one in every of its best possible-performing units, Toshiba scientific programs, to Canon Inc. this 12 months.

Naoki Fujiwara, fund supervisor at Shinkin Asset administration, mentioned some buyers had viewed the nuclear industry as a potential growth area because of demand in creating nations. “in the event you think more of this could happen sooner or later, it will be troublesome to spend money on the company over the mid to long term,” he said.

— Takashi Mochizuki contributed to this article.

Write to Kosaku Narioka at [email protected]

WSJ.com: US industry