Nuclear deal triggers Toshiba CEO resignation, $6.3 billion write down
Struggling technology conglomerate Toshiba today announced the resignation of its chairman Shigenori Shiga. Toshiba also plans to write off more than $6 billion and close down the business of building nuclear power plants. Toshiba is also set to report a net loss of $3.4 billion for 2016-17. These decisions come in the wake of a flawed 2015 American nuclear energy deal that faces investigations.
How bad was the 2015 deal?
Toshiba's American subsidiary Westinghouse Electric had bought a nuclear construction and services business from Chicago Bridge & Iron in 2015. The assets bought were cheaper than negotiated but there were several liabilities that were not taken into account. Toshiba, the second-largest seller of memory chips, will sell the lucrative segment to stomach these losses and is looking for partners to run Westinghouse Electric.
Toshiba's struggles other than the deal
Toshiba made news in 2015 when it was discovered that profits were overstated for seven long years, prompting the chief executive to resign. The company delayed reporting its official financial results for a month, citing auditing problems. This news sent Toshiba spiralling down by 8% in Tokyo trading exchange. The company is anticipating net loss worth $3.4 billion in the year ending March 2017.
The 2011 meltdown in Toshiba supplied nuclear reactors in Japan
A tsunami-triggered incident in Japan's Fukushima Daiichi Nuclear Power Plant disabled the reactor cooling systems, leading to radioactive releases. The meltdown caused a 30 km evacuation zone around the plant while its releases continue to this day. Toshiba had supplied two of the reactors.
