Tokyo, April 19 (IANS) The Japanese conglomerate Toshiba plans to split most of its main business branches, in addition to its memory chip unit, in order to improve its financial health, media reports said on Wednesday.
Toshiba, which is facing a financial crisis stemming from the bankruptcy of its nuclear power plant division, Westinghouse Electric in the US, is planning to create four new separate companies, Efe news reported.
These will be in the areas of infrastructure, energy, electronic devices and telecommunication services in its bid for extensive restructuring.
The split of the conglomerate's four main business areas, coupled with the recent formation of an independent company for the memory chip unit, would ameliorate the company's financial status, sources told Kyodo news agency.
Toshiba Corp could still maintain its control of these new companies through majority holdings, and is planning to submit this plan to shareholders for approval at a general meeting in June, said business newspaper Nikkei.
The restructuring would provide more operational flexibility to each new company and would also involve the transfer of some 20,000 employees of the Japanese giant to the new companies, according to the same media.
The measure, which was already introduced by the company's board of directors on December 11, 2016, while presenting its financial results, was well received on the Tokyo Stock Exchange, where shares of the Toshiba group gained more than one per cent in the first session of trade.
Toshiba suffered a net loss of $4.9 billion between April and December 2016, the first nine months of the Japanese fiscal year, and accumulated negative equity in the same period.
The main reason was the indebtedness of Westinghouse Electric due to the increasing construction costs for new nuclear plants in the US, which subsequently led to the bankruptcy of the subsidiary and forced Toshiba to split its memory chip unit.
Toshiba Corp intends to sell a majority of its shares in this new independent company with the aim of improving its liquidity, and is currently studying the offers from potential buyers.