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Toshiba's failure to submit audited third-quarter earnings on
Tuesday and its announcement of an expanded probe into
Westinghouse also contributed to broad disappointment as did the
Tokyo Stock Exchange's placing of the stock on its supervision
list.
While the bourse's move was an automatic one that follows
Toshiba's failure to clear up concerns about its internal
controls a year and a half after a 2015 accounting scandal, it
increases the risk of a delisting.
Market participants said the bourse's action meant that the
shares were now "untouchable" for institutional investors who
cannot invest due to compliance reasons.
Toshiba would be delisted if the bourse is not satisfied with a
report on internal controls that Toshiba submitted on Wednesday.
The report, required since the 2015 accounting scandal, must
also address internal control lapses since then.
"Crucial details about Westinghouse won't be there. Toshiba is
already in trouble for delaying the filing of its quarterly
earnings twice, and without the complete report, the exchange is
unlikely to find its report satisfactory," said Fumio Matsumoto,
a senior fund manager at Dalton Capital Japan.
Chief Executive Satoshi Tsunakawa sidestepped questions about a
potential Chapter 11 filing for Westinghouse on Tuesday, saying
only there were various options. Sources have said bankruptcy
lawyers have been hired as an exploratory step.
Shares in the TVs-to-construction conglomerate slid 7.5 percent
in early trade. They have plunged by more than half since
December, slashing the company's market value to $7.4 billion.
Masayuki Doshida, senior market analyst at Rakuten Securities,
said too much uncertainty surrounded the firm.
"For how much can it sell the chip business? When will it
release its earnings? Will it remain listed? And can it sell
Westinghouse? We are just getting more questions," he said.
Toshiba will meet with creditor banks later on Wednesday to
explain the situation, sources familiar with the matter said.
(This story has been refiled to correct paragraph 4 to add
dropped word 'shares')
(Reporting by Ayai Tomisawa and Hideyuki Sano; Writing by Naomi
Tajitsu; Editing by Edwina Gibbs)
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