Toshiba sues Western Digital for $1 bln over memory-chip business sale

Published 28.06.2017 10:08
Updated 28.06.2017 10:09
emAFP Photo/em
AFP Photo

Japan's Toshiba Corp said on Wednesday it is filing a lawsuit against joint venture partner Western Digital Corp.

Toshiba is claiming 120 billion yen ($1.07 billion) in damages, saying in a statement that Western Digital is interfering with the sale of its memory chip division.

Western Digital "has continually interfered with the bid process related to the sale" of the chip unit, Toshiba said in a statement.

Toshiba also said it has decided to shut out Western Digital employees based outside the Yokkaichi chip plant from accessing information relating to the two companies' joint venture.

Meanwhile, the head of embattled Japanese conglomerate Toshiba apologized at a shareholders' meeting on Wednesday for a delayed 2016 earnings report and a recent demotion of the company's shares to the second tier of the Tokyo Stock Exchange.

"I apologize for repeatedly causing so much inconvenience and worries," Toshiba president Satoshi Tsunakawa said at the meeting in Chiba, 40 kilometers south-east of Tokyo.

Japanese regulators on Friday approved the extension of a deadline for submitting Toshiba's annual financial results to August 10, as the company has yet to win approval for the report from its auditor.

On the same day, the Tokyo exchange announced Toshiba's demotion from top-tier listing as the company reported its liabilities had exceeded its assets for the previous financial year ended in March.

The 142-year-old Japanese company has faced its worst-ever financial crisis since its US nuclear power unit, Westinghouse Electric, filed for bankruptcy protection in March.

Last week, the company picked a consortium of state-backed Innovation Network Corp of Japan, the state-owned Development Bank of Japan and U.S. fund Bain Capital as its preferred bidder.

The group's bid was considered to have exceeded Toshiba's 2-trillion-yen (18-billion-dollar) valuation of the memory-chip unit, the Nikkei business daily reported.

The company said last week it would secure the deal by Wednesday's meeting, but it announced a delay with the consortium for the sale.

"It is taking time to reach a consensus because the consortium comprises multiple parties, and closure was not achieved by Toshiba's primary target date," the company said in a statement prior to the shareholders' meeting.

The company plans to reach "a definitive agreement at the earliest possible date," it added.

Toshiba's chip-producing partner Western Digital has opposed the move. The U.S. company has re-submitted a bid with U.S. investment fund Kohlberg Kravis Roberts (KKR) for Toshiba's chip unit, it said on Monday.

"Western Digital resubmitted a bid with KKR where Western Digital will provide debt financing to facilitate a sale by Toshiba Corporation of its interests in the NAND Flash Memory joint venture," the company said in a statement.

Earlier this month, Western Digital asked a U.S. court to stop Toshiba from selling its chip business.

In the 2015-16 financial year, Toshiba suffered a record net loss of 460 billion yen as it was forced to undergo restructuring in the wake of a major accounting scandal.

In 2015, Toshiba admitted to inflating its profits by nearly 2 billion dollars during the course of seven years.

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