Embattled Toshiba to boost capital by $5.3 bn share issuance

Toshiba Corp. has said it will issue more than 2 billion new shares for third-party allotment on December 5 to raise ¥600 billion in fresh capital, an effort to keep its shares listed.

Tokyo Stock Exchange rules require delisting a company whose net worth is negative for two consecutive years.

The company is on the ropes after its disastrous acquisition of USA nuclear energy firm Westinghouse, which racked up billions of dollars in losses before being placed under bankruptcy protection.

In order to survive and avoid delisting, the cash-strapped group has decided on a multibillion-dollar sale of its prized chip business to a consortium led by Bain Capital.

- The shares will be sold at 262.8 yen apiece, a discount to the previous closing price of 292 yen, with payment received by December 5.

Toshiba will issue about 2.3 billion new shares priced at 262.8 yen ($2.35) per share, it said Sunday - about 10% cheaper than Friday's closing price of 292 yen ($2.61).

The move will create a huge dilution of 54% in earnings per share. Effissimo declined to comment specifically on its investment in Toshiba.

Payments from investors for the new shares will be completed on December 5.

The share sale, together with the tax write-offs, will boost its balance sheet by at least 840 billion yen in total, the company said. It also said it is looking at selling its Westinghouse-related assets.

Sources told Reuters in September that Westinghouse is working with investment bank PJT Partners Inc on a sale process.

Private equity firms Blackstone Group LP BX.N and Apollo Global Management LLC APO.N have teamed up to bid for the business while Cerberus Capital Management LP was in talks with USA nuclear power plant component provider BWX Technologies Inc BWXT.N about submitting a joint bid, the sources said at the time. But there are concerns that the sale may not be completed by the end of March 2018 due to lengthy antitrust reviews in Japan and overseas.

The chip deal still faces legal challenges from its chip joint venture partner Western Digital, which argues no deal can proceed without its consent and has sought an injunction through an global arbitration court.

Toshiba's new shareholders are hoping Western digital can do them a favor.

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