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Toshiba shares fall 20% on deal warning | Toshiba shares fall 20% on deal warning |
(about 14 hours later) | |
Toshiba shares fell 20% on Wednesday after the firm warned that its US nuclear business may be worth less than previously thought. | Toshiba shares fell 20% on Wednesday after the firm warned that its US nuclear business may be worth less than previously thought. |
The slump was large enough for trading in stocks of the Japanese industrial giant to be automatically halted. | The slump was large enough for trading in stocks of the Japanese industrial giant to be automatically halted. |
Shares had already fallen 12% on Tuesday after reports of the likely write-down began circulating. | |
Toshiba said the possible heavy one-off loss was linked to a deal done by a US subsidiary, Westinghouse Electric. | Toshiba said the possible heavy one-off loss was linked to a deal done by a US subsidiary, Westinghouse Electric. |
Westinghouse bought the nuclear construction and services business from Chicago Bridge & Iron in 2015. There is now a dispute over the costs of the deal and the value of the assets it took on. | |
Toshiba president Satoshi Tsunakawa apologised for "causing concern". | |
Slimming down | Slimming down |
Rating agencies Moody's and R&I both downgraded Toshiba's credit rating, which will make it more expensive for the company to borrow. | |
R&I warned that it could issue further downgrades, while Moody's cautioned that further impairments could lead to Toshiba breaching agreements with its banks. | |
The warning was a blow for the firm's corporate reputation, which is still struggling to recover after it emerged in 2015 that profits had been overstated for years, prompting the chief executive to resign. | |
Since then, Toshiba has been trying to slim down the business, including selling its medical devices operations to Canon. | Since then, Toshiba has been trying to slim down the business, including selling its medical devices operations to Canon. |
While the share price slump is a blow for investors, 2016 had still been a pretty good year given that the stock had risen more than 77% before this week's falls. |