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Toshiba may delay chip auction after widening sale to majority stake: Source

A man walks past the logo of Toshiba displayed at the company’s headquarters in Tokyo on February 14, 2017.

Behrouz Mehri | AFP | Getty Images

Toshiba may delay the sale of its prized flash-memory chip unit after the conglomerate said it would consider selling most, even all, of the marquee business, a person with direct knowledge of the matter said.

“It’s moving in that direction (of a delay),” the source said late on Wednesday, on condition of anonymity as the discussions weren’t public. As Toshiba’s plans for the sale have changed, “the bidders are having various thoughts.”

The TVs-to-nuclear conglomerate is scrambling for cash to stay in business as a multi-billion-dollar hole has emerged in recent months in its nuclear business.

 A man walks past the logo of Toshiba displayed at the company's headquarters in Tokyo on February 14, 2017.

Toshiba shares sank 9 percent on Wednesday after the company said it would book a $6.3 billion hit to its U.S. nuclear unit and would consider selling more than the originally planned stake of less than 20 percent of the flash-memory chip business.

Changing the rules of the chip auction, which sources have said has generated bids of 200-400 billion yen ($1.8-$3.5 billion), could push the sale beyond Toshiba’s planned deadline of the March 31 end of the business year, the source said.

Loosening the deadline would ease concerns about trying to hurry any antitrust reviews, increasing the number of potential buyers and potentially improving the offers, he said.

Toshiba has accepted that it may remain in negative net worth through the end of the business year, the source said, which could see its shares demoted to the second section of the Tokyo Stock Exchange. As a result, the source said, it would have to convince its lenders to keep the funds coming.

The result could also be a rethink of the whole auction as some bidders may now want management rights or have other responses to Toshiba throwing open the bidding to include a majority stake, he said.

The change of direction by Toshiba – facing a March 27 deadline to avoid a delisting – has prompted investors to question whether the company would have a long-term future without control of the unit and could well shake up the bevy of suitors interested in a piece of the world’s biggest NAND chip producer after Samsung Electronics.

“Usually in a corporate turnaround plan, the company would keep its most competitive business after selling non-performing businesses,” said Masayuki Kubota, chief strategist at Rakuten Securities

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