Toshiba president bows abjectly as reluctant investors back Bain deal
Chiba — Toshiba’s president Tuesday apologised "sincerely" over the $18-billion sale of its prized memory chip business, as shareholders demanded answers over the deal seen as pivotal to the survival of one of Japan’s best-known firms.
Bowing deeply at the start of a tense shareholders’ meeting, Satoshi Tsunakawa said: "We sincerely apologise for causing problems and worry."
More than 600 investors poured into the meeting as they voted in favour of the sale to a consortium led by US investor Bain Capital — which includes US tech giants Apple and Dell as well as South Korean chip maker SK Hynix — after months of wrangling.
Angry jeers rang out from some stockholders who had little choice but to agree to unload the division so the cash-strapped company can plug massive losses at its US nuclear division, Westinghouse Electric.
Tsunakawa pledged to finish the sale by the end of March 2018 and stressed: "We will continue to have honest management, and improve our internal governance."
That pledge did not sit well with one 77-year-old pensioner who owns Toshiba stock, which has plunged about 25% since the losses were made public in late December.
"I cannot believe what the executives are saying about turning the company around," he told AFP.
"They all look smart and are eloquent. I wonder if they knew about the losses at Westinghouse years ago."
Former Toshiba employee Masayuki Sakurai said the firm’s top brass was evasive about what would happen if the planned sale were to fall through.
"It’s still not clear if the memory chip sale will be done by March and they couldn’t give us a clear answer on what would happen if it was unsuccessful," Sakurai said. "That’s worrying."
The chip unit brought in about a quarter of Toshiba’s total annual revenue and is the crown jewel in a vast range of businesses ranging from home appliances to nuclear reactors.
Toshiba, the world’s number-two chip maker behind Samsung, narrowly averted a delisting this year, but it still faces the humiliating prospect of being yanked from Japan’s premier stock exchange if the sale does not raise enough money.
Some investors doubt things will change at the firm, which was recovering from a 2015 accounting scandal when the huge US losses were made public.
On Monday, the firm said it would post a ¥110bn ($970m) net loss in the current fiscal year because of a tax bill linked to the massive sale.
"Executives never give us clear answers at these meetings," complained Ken Futoo, a 57-year-old former Toshiba employee turned real estate agent said before the meeting.
"They just do what big shareholders and the banks tell them to do. I regret that they have to sell the chip division. It’s really bad but there was no choice if the banks told them to sell it."
He warned that Toshiba could find itself in trouble again, despite the much-needed cash injection.
"What’s at issue is the company’s governance," Futoo said.
The Japanese industrial giant is trying to recover from the disastrous acquisition of Westinghouse, which racked up billions of dollars in losses before being placed in bankruptcy protection.
Those losses came to light as the group was still reeling from revelations that top executives had pressured underlings to cover up weak results for years after the 2008 global financial meltdown.
The twin crises were a major embarrassment for a cornerstone of Japan Inc, which traces its history back as far as 1875 when Toshiba started life as a telegraph factory in what is now Tokyo’s Ginza shopping district.
"I came to listen to the president to find out why Toshiba, which used to be a great company, is now in this trouble," said Nobuko Kaneko, a 60-year-old teacher.
"There are many bright people I know, including friends, who worked for the company."