Toshiba files results unapproved by auditor; warns of 'going concern' risk

Tue Apr 11, 2017 10:13pm EDT
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By Makiko Yamazaki and Taiga Uranaka

TOKYO (Reuters) - Toshiba Corp (6502.T: Quote) filed twice-delayed business results on Tuesday without an endorsement from its auditor and warned its very survival was in doubt, deepening a prolonged crisis at the Japanese conglomerate.

"There are material events and conditions that raise substantial doubt about the company's ability to continue as a going concern," Toshiba said in announcing bigger than previously estimated losses for the nine months through December.

The filing carried a disclaimer from auditor PricewaterhouseCoopers (PwC) Aarata LLC that it was unable to form an opinion of the results, increasing the likelihood that shares in the nuclear-to-TVs company will be delisted from the Tokyo Stock Exchange (TSE).

The move is a first for a major Tokyo-based firm, and puts the stock exchange center-stage as it weighs the pros and cons of forcing Toshiba to delist.

Toshiba Chief Executive Satoshi Tsunakawa expressed regret that the auditor could not form an opinion, and said Toshiba pressed ahead with submitting its results rather than seek an unprecedented third delay.

"The decision on any delisting is for the stock exchange to make," he told a news conference in Tokyo, the latest in a string of briefings that have opened with apologies to shareholders. "We will do our utmost to avoid it."

Failing to act tough with Toshiba would bring into question authorities' credibility in maintaining standards for investors, but a delisting would complicate the crisis at Toshiba, increasing its financing costs and exposing it to further lawsuits from angry shareholders.

Accountants have been questioning the numbers at U.S. nuclear subsidiary Westinghouse Electric Co, where massive cost overruns at four nuclear reactors under construction in the Southeastern United States have forced its Japanese parent to estimate a $9 billion annual net loss and take drastic measures.   Continued...

Toshiba Corp CEO Satoshi Tsunakawa attends a news conference at the company's headquarters in Tokyo, Japan, April 11, 2017.    REUTERS/Toru Hanai