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Moody's places Toshiba on review for upgrade

Moody's on May 18 said it placed Toshiba Corp.'s Caa1 corporate family and senior unsecured debt and Ca subordinated debt ratings on review for upgrade, after the Japanese conglomerate received the go-ahead to sell its memory chip business for ¥2 trillion.

"The sale will significantly reduce our concerns about Toshiba's liquidity and ongoing viability," said Masako Kuwahara, a Moody's vice president and senior analyst.

Moody's said the deal would boost Toshiba's cash position by ¥1.45 trillion to ¥2 trillion, resulting in a net cash position of ¥1.3 trillion and gains of about ¥970.0 billion.

"Without the sale, liquidity would have tightened from the substantial capital expenditure requirements for its memory business," Kuwahara added.

In a May 17 statement, Toshiba said it had obtained all necessary approvals for the sale of Toshiba Memory Corp. to a consortium led by U.S. private equity firm Bain Capital LP.

Moody's said it could conclude the review around the transaction closing, which is expected June 1. The rating agency will assess the application of the sales proceeds and the resulting capital structure, as well as the sufficiency of future earnings and cash flow from the remaining businesses.

As of May 17, US$1 was equivalent to ¥110.82.