TOKYO Sumitomo Mitsui Banking Corp (SMBC), one of the main lenders to Toshiba Corp (6502.T), will provide as much support as possible to the troubled Japanese firm, the bank's chief executive said.
The TVs-to-nuclear conglomerate is scrambling for cash to stay in business as a multi-billion-dollar hole has emerged in its nuclear business. Toshiba has announced it would consider selling most, even all, of its stake in its prized flash-memory chips business, highlighting the scale of its financial woes.
Toshiba is expected to "effectively" keep positive net worth at its business year-end in March if the sale of its memory chip business, which could come after the period, is counted, said SMBC's Takeshi Kunibe, who was speaking on Thursday at a news conference as chairman of the Japanese Bankers Association.
SMBC is a unit of Sumitomo Mitsui Financial Group (8316.T).
"Memory business is performing very well. It has a very good value. Toshiba is considering selling a certain proportion of the business and if it is taken in consideration, its equity capital is effectively in positive territory," Kunibe said.
According to a source, Toshiba may delay the sale of its flash-memory chip unit given the firm's rethink on the size of the stake. The company was earlier looking to sell less than 20 percent of the unit.
Toshiba has accepted it may remain in negative net worth through the end of the business year, the source said, which could see its shares demoted to the second section of the Tokyo Stock Exchange. As a result, the source said, it would have to convince its lenders to keep the funds coming.
At a meeting with its creditors on Wednesday, Toshiba executives asked for an extension of a waiver for a loan covenant violation until the end of March, financial sources said, declining to be identified as they were not authorized to speak to the media on the matter.
(Reporting by Taiga Uranaka; Editing by Himani Sarkar)