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Toshiba Wins Auditor Sign-Off, Likely Avoiding Delisting for Now

Toshiba Wins Auditor Sign-Off, Likely Avoiding Delisting for Now

The Japanese electronics company pins the losses on the sizable debt incurred by its Westinghouse Electric nuclear power plant, which filed for bankruptcy in March.

PriceWaterhouseCoopers Aarata LLC (PwC) gave a "qualified opinion" on Toshiba´s results for the year ended March as well as for April-June, according to a filing. That means it broadly vouched for Toshiba's book-keeping despite finding minor problems.

In June, Toshiba picked the consortium of state-backed Innovation Network Corp of Japan, the state-owned Development Bank of Japan and USA fund Bain Capital as its preferred bidder for its chip business. Toshiba has struggled to win back the trust of shareholders since a 2015 accounting scandal, in which it admitted to inflating profits over several years.

Toshiba shares jumped on Monday after a report that the firm will sign off on its annual financial results after months of being at odds with the embattled conglomerate, a step that would lessen, but not remove, the risk of a delisting.

Toshiba's memory business is its cash cow, and questions on whether Toshiba can maintain its competitiveness as a company after selling off the unit have been raised.

The adverse opinion was over what Toshiba describes as a failure to reach and agreement on the timing of a loss recognition, which related to one of the company'sformer subsidiaries, Westinghouse's, acquisition of CB&I Stone & Webster.

On the other hand, the spokeswoman said that an adverse opinion for Toshiba's corporate governance or even for its financial statement will not necessarily lead to delisting, either. If the losses were booked as per PwC's opinion, Toshiba would have recorded negative net worth - liabilities exceeding assets - for two consecutive years.

The auditor's sign-off reduces the immediate threat of Toshiba being delisted from the Tokyo Stock Exchange. Analysts have said delisting is unlikely as long as PwC signed off on the results.

Even with the reprieve, analysts have said Toshiba´s long-term prospects are bleak, with the firm trying to raise cash by selling its flash memory business - its only division showing significant growth after the sale of its medical devices unit a year ago. The company reported sales of 4.8 trillion yen ($43.66 billion), down 5.5% from the previous year and unchanged from the outlook.



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