[Global Technology Correspondent Wang Huan] According to a report by Japan's Kyodo News Agency on August 1, Toshiba, which is currently undergoing a business restructuring process, was demoted from the main board of the Tokyo Stock Exchange to the second board market on the 1st. This downgrade stems from Toshiba's massive losses in its U.S. nuclear power business, which ultimately led to insolvency by the end of March. As a result, the company failed to meet the listing requirements set by the Tokyo Stock Exchange. This demotion highlights the current dire situation facing Toshiba.
If the insolvency issue remains unresolved by the end of March next year, Toshiba's shares will be automatically delisted. The prospects for the company’s restructuring efforts look uncertain, particularly as key negotiations regarding the sale of its semiconductor subsidiary have stalled. The electronics giant is attempting to sell this subsidiary for more than 2 trillion yen in hopes of avoiding insolvency. Toshiba is engaged in priority talks with Japan’s government-led "Japan-US-Korea Consortium," but no formal contract has been signed yet. Western Digital Corporation (WD), one of the joint venture partners, has opposed the sale of the semiconductor subsidiary to external entities and has continued to file lawsuits against it.
The deadline for submitting Toshiba's fiscal 2016 "Financial Report" (Financial Report) has been postponed until August 10. With this date fast approaching, if an auditing agency issues an "inappropriate" opinion, the Japanese exchange group that oversees the Tokyo Stock Exchange may decide to delist Toshiba. Even if Toshiba manages to remain listed, it might not be able to return to the main board market within the next five years due to the Tokyo Stock Exchange's requirement for proper financial settlement.
Toshiba, once a prominent stock on the main board of the Tokyo Stock Exchange, had a market capitalization ranking among the top ten outside of financial institutions during the economic bubble era. Its stock price once exceeded 1,000 yen. However, following the exposure of financial irregularities in 2015, the stock price plummeted dramatically. Although it briefly rebounded in 2016, the massive losses incurred by the U.S. nuclear power business at the end of that year caused the stock price to crash again.
The downgrade follows a similar situation last year when Sharp also dropped from the main board to the second board after two consecutive years of poor performance. On July 31st, Toshiba's final trading day on the main board saw its shares primarily traded lower. However, there was some speculative capital injected near the close, pushing the closing price per share up slightly to 246.00 yen (approximately RMB 15 yuan), representing a 2.8% increase from the previous Friday’s closing price of 239.20 yen.
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The decline of such a major electronics company from the main board to the second board market serves as a stark reminder of the challenges faced by corporations in maintaining their financial health and market position. As Toshiba navigates these turbulent waters, investors and stakeholders alike are closely monitoring developments, hoping for a resolution that ensures the company's future viability.
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