Glimmer of hope for Toshiba as auditors consider partial sign-off

After a torrid year, Toshiba has finally been offered a glimmer of hope. With talks underway with auditor PricewaterhouseCoopers Aarata (PwC), Toshiba is now hopeful that the firm will not be delisted.

Toshiba is now quietly confident that it will gain a partial endorsement from its auditor for its annual financial results, reducing the risk of losing its listed company status. Toshiba has been threatened with being delisted since it dropped out of the Nikkei 225 for the first time in its history. The prospect of being delisted has stalled a prospective sale of its valuable chip business.

Since taking over as Toshiba’s auditor in June last year, PricewaterhouseCoopers Aarata (PwC) has yet to endorse the firm’s financial results which have suffered numerous delays. In particular, PwC has queried whether Toshiba should have recognised multi-billion dollar losses at U.S. nuclear arm Westinghouse earlier than last December, sources familiar with the matter have said.

However, PwC is now looking at issuing an ‘opinion with qualifications’, which could allow Toshiba to remain a listed company.

"It’s a necessary step forward – but not a sufficient step forward – to resolve the list of uncertainties," said Macquarie analyst Damian Thong. "The sale of Toshiba Memory is something that’s much more significant to the future of the company.”

Since declaring its nuclear arm bankrupt, Toshiba has been desperately attempting to recoup funds by selling off other branches of its business. In particular the company has been keen to cash in on its multi-billion dollar chip business.

Toshiba had hoped to tie up a deal by the end of June, but an injunction request from company partner Western Digital prevented any sale from being finalised. It was reported in June that the company had given shareholders until the end of the month to decide on a potential buyer. But the last minute request from Western Digital scuppered that plan. An out-of-court agreement between the two partners has now resolved this issue, meaning a deal is one step closer to going ahead.

All of this comes in an effort to make up the $18 billion it needs pay off huge loans it has accrued. The nature of the sale has seen the Japanese government heavily involved, with emphasis being placed on keeping the firm within the country.

Toshiba’s financial woes are largely connected to its failed nuclear unit Westinghouse. Acquired in 2006, an ill-advised purchase in 2015 has led to massive scandal and loses for its parent company. Last month Westinghouse filed for a Chapter 11 bankruptcy and Toshiba is attempting to split from the company. Since revealing its financial turmoil a number of investors have shown an interest in Toshiba’s technology businesses.

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