By Taro Fuse and Kentaro Hamada
TOKYO (Reuters) - Toshiba Corp aims to file its twice-delayed business results on Tuesday afternoon without an endorsement from its auditors, one person familiar with the matter said, increasing the likelihood of a delisting.
Such a filing would be unprecedented for a major Tokyo-based firm and would put financial regulators and the Tokyo Stock Exchange centre stage as they weigh whether it would be acceptable, as well as the pros and cons of forcing it to delist.
Failing to act tough with Toshiba would bring into question authorities' credibility in maintaining standards for investors but a delisting would further complicate the crisis engulfing the nuclear-to-TVs conglomerate.
Toshiba has not managed to get auditors to sign off on earnings for the three months to December, said the source who declined to be identified as he was not authorised to talk to the media.
Toshiba will not seek another extension but instead will submit with a disclaimer from auditor PricewaterhouseCoopers (PwC) Aarata LLC that it is unable to form an opinion of the results, the source said, adding that Toshiba would hold a news conference around 4.00 p.m. Tokyo time (0700 GMT).
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But for Toshiba to do even this, it must receive the review from PwC by Tuesday afternoon. Otherwise it must seek another extension from Japanese finance authorities.
Toshiba has failed to file audited earnings for the three months through December, as the accountants question the numbers at U.S. nuclear subsidiary Westinghouse Electric Co, where massive cost overruns have pushed the Japanese parent company to the brink. Toshiba said that it was aiming to file its results but declined to comment further. A spokesman for PWC Arata said the firm was not in a position to comment about clients.
PwC is questioning not only recent results but also probing the books at Westinghouse for the business year through March 2016, sources have said.
Westinghouse filed for U.S. bankruptcy protection from creditors two weeks ago, hit by billions of dollars of cost overruns at four nuclear reactors under construction in the Southeastern United States.
Shares in Toshiba dropped 3 percent on Tuesday. They have lost half their value since the nuclear problems surfaced late last year.
Toshiba, a laptops-to-construction behemoth, has said it expects a $9 billion net loss for the business year ended March 2017 due to writedowns at Westinghouse. It is trying to sell most or all of a prized unit that is the world's second-biggest producer of NAND semiconductor chips.
Taiwan's Foxconn has offered up to 3 trillion yen ($27 billion) for the chip business, nearly $10 billion higher than Toshiba's own estimate, the Wall Street Journal reported, citing people familiar with the matter.
Such a proposal by Foxconn would also put Japanese regulators in a tough position as they have vowed to vet bidders to block a sale to investors it deems a risk to national security.
Japan's trade minister Hiroshige Seko repeated on Tuesday that Toshiba's chip technology was important, not only for Japan's growth strategy, but also in terms of jobs and information security.
"For those reasons, we continue to carefully monitor Toshiba's business conditions and sale of its chip business," Seko said.
Toshiba declined to comment on its chips business and Foxconn, formally known as Hon Hai Precision Industry, was not immediately available to comment.
Toshiba might get some sympathy from the authorities, as the Financial Services Agency (FSA), which oversees the regional finance bureaus, is becoming frustrated with PwC's probes of results checked by Toshiba's previous auditor, Ernst & Young (EY) ShinNihon LLC.
"If Toshiba were restating past year's earnings, that would be one thing, but Aarata doesn't have the authority to reject EY's audit of past years," a senior FSA official said.
"What do investors want to know? Are they interested in past profit-and-loss statements?" he said. "What they're concerned about is the current balance sheet."
Kanto Local Finance Bureau officials declined to comment.
($1 = 110.7900 yen)
(Reporting by Taro Fuse and Kentaro Hamada; Additional reporting by Makiko Yamazaki Takahiko Wada, Ami Miyazaki and Taiga Uranaka; Editing by William Mallard and Edwina Gibbs)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
