Toshiba in legal spat with Western Digital over sale of chip unit

Source: Xinhua| 2017-06-28 17:58:52|Editor: Yamei
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TOKYO, June 28 (Xinhua) -- Toshiba Corp. filed a damages suit on Wednesday to the tune of 120 billion yen (1.06 billion U.S. dollars) against its joint venture partner Western Digital Corp, for the U.S. company blocking the planned sale of its chip unit.

According to a statement released from the Japanese conglomerate, "proceeding with the sales process for (Toshiba Memory Corp.) does not violate any consent rights held by Western Digital; Western Digital's claims are false, designed only to interfere with the sale process, and have damaged Toshiba and (Toshiba Memory)."

Toshiba, who announced last week it would conduct negotiations solely with a government-led consortium over the sale of its prized memory-chip unit, said that Western Digital had "improperly attained" Toshiba's trade secrets and Toshiba now plans to block the U.S. firm's access to its data.

Toshiba's damages lawsuit with the Tokyo District Court Wednesday comes on the heels of Western Digital petitioning a U.S. court to block Toshiba's sale of its chip unit, claiming that the move was being made without its consent and was in breach of the contract regarding the joint venture between both companies.

Toshiba is hoping however that a deal for its chip unit comprising the state-backed Innovation Network Corp. of Japan, the state-owned Development Bank of Japan, U.S. fund Bain Capital and South Korea's SK Hynix Inc., will raise around 2 trillion yen which is enough for its negative net worth to be canceled out and for it not to be delisted from the Tokyo Stock Exchange.

Toshiba President Satoshi Tsunakawa said he hoped the deal will be finalized as soon as possible, although Western Digital has said it has put in its own bid for the chip unit alongside U.S. investment fund Kohlberg Kravis Roberts.

"We are aiming to seal the deal as soon as possible and hope to close it within fiscal 2017," Tsunakawa said at a shareholders meeting. "I apologize for repeatedly causing so much inconvenience and worry."

Cash-strapped Toshiba posted a group net loss of 532.51 billion yen (4.78 billion U.S. dollars) and a group operating loss of 576.28 billion yen, on sales of 3.85 trillion yen during the nine-month through December.

The net loss compares to previous estimates of 499 billion yen and 479.44 billion yen posted at the same time a year earlier.

The larger-than-expected losses follow Toshiba twice postponing the release of its financial figures since Feb. 14.

At the end of March, Toshiba approved a Chapter 11 bankruptcy filing in the United States by its embattled Westinghouse Electric unit.

Toshiba said recently it was facing a possible 712.5- billion-yen writedown on its failing nuclear energy business and a related group net loss of more than 1 trillion yen.

The Japanese firm which employs 188,000 people globally has run the risk of being delisted from the Tokyo Stock Exchange with its shares, for the time being, set to be demoted to the Second Section on the Tokyo Stock Exchange in August.

Between 2008 and 2014, the multinational conglomerate was involved in padding its profits by 152 billion yen, leading to its chief and half of its board resigning.

The firm was subsequently fined an unprecedented 60 million U.S. dollars.

Recent accounting irregularities at Westinghouse Electric have done little to improve the conglomerate's image.

In the wake of the 2011 Fukushima nuclear crisis Toshiba has been struggling to secure new nuclear-related contracts.

Toshiba is also expected to sell its domestic television business having already withdrawn from the international market.