Toshiba entered an agreement to sell its shares in Toshiba Memory Corp.


  • Toshiba entered an agreement to sell its shares in: Toshiba Memory Corp., which we consider a step forward in the company's plan to resolve its insolvency through the sale of Toshiba Memory for about ¥2 trillion by the end of March 2018.
  • In addition, potential risk of additional losses and financial burdens from its U.S. nuclear power business has declined, resulting in lowered risk of a surge of pressure on the ratings, in our view.
  • We are affirming our long- and short-term ratings on Toshiba and are removing them from CreditWatch with negative implications.
  • The negative outlook reflects our view that there is a risk of failure to complete a sale of Toshiba Memory by March 31, 2018, if the countries concerned take longer to review the sale in accordance with their antitrust laws or if the International Court of Arbitration decides to block the sale of joint venture interests.
  • We are raising our senior unsecured debt rating on Toshiba one notch to 'CCC-' and are removing the rating from under criteria observation (UCO) placement following revision of our criteria for corporate issue ratings.

The negative outlook reflects our view that completion of the sale of Toshiba 
Memory may be delayed or the sale plan may be revised. This could happen if 
the review process for the sale under antitrust laws in countries concerned 
takes longer than planned or if the International Court of Arbitration 
approves a request filed by U.S.-based Western Digital Corp. to suspend the 
sale of joint venture interests between Toshiba and Western Digital. In 
addition, some uncertainties relating to the companies in the consortium and 
to the financial contribution scheme may also affect the plan, in our opinion. 
Accordingly, there is over a one-in-three chance that Toshiba will fail to 
receive sale proceeds and resolve its insolvency by March 31, 2018, in our 
view. If this scenario materializes, the company may consider temporary 
financial restructuring measures by March 31, 2018, to avoid delisting, which 
has the potential to negatively affect Toshiba's ability to acquire new 
customers or projects. Furthermore, if the plan to sell Toshiba Memory is 
unlikely to materialize following the judgment of the International Court of 
Arbitration, creditor financial institutions may change their supportive 
stance.