Toshiba Corp is liquidating its British nuclear power unit and selling its U.S. liquefied natural gas (LNG) business, as the once-mighty industrial conglomerate seeks to unload troubled assets and regain investors’ confidence.
The plans are part of a new five-year business strategy Toshiba announced on Thursday, which also included 7,000 job cuts, or 5 percent of its workforce, over five years.
The company’s shares surged as much as 13.7 percent to near two-year highs after the announcement, helped also by a much anticipated move to repurchase up to 40 percent of its own shares starting Friday. They closed 12.7 percent higher.
Toshiba has been trying to win back the market’s trust after a 2015 accounting scandal uncovered widespread irregularities at the laptops-to-nuclear conglomerate for years.
The scandal forced it to recognize huge cost overruns at now-bankrupt U.S. nuclear unit Westinghouse, prompting it to sell its prized memory chip unit earlier this year to a consortium led by U.S. private equity firm Bain Capital and leaving it with few growth businesses.
“There had been reports about a possibility of selling non-performing business and job cuts so such moves had been expected at some point. But investors are taking heart,” said Hiroyuki Fukunaga, chief executive of Investrust, a financial advice firm.
“The share buyback announcement worth up to 40 percent of outstanding shares is definitely positive, too.”
Toshiba had already promised a share buyback of 700 billion yen earlier this year, but the timing had been undecided. Its announcement on Thursday appeared to outweigh a weaker profit forecast – the company said it now expects a full-year operating profit of 60 billion yen rather than a previous estimate of 70 billion yen.
Toshiba has been trying to shed troubled assets that could have exposed the Japanese company to future losses.
The decision to liquidate NuGen, however, would be a blow to Britain’s plans to build a nuclear plant that was meant to provide 7 percent of the country’s electricity. Reuters was the first to report last month that Toshiba was considering liquidating NuGen.
South Korea’s state-run Korea Electric Power Corp (KEPCO) has been in talks with Toshiba to buy a stake in NuGen. South Korea’s energy ministry said on Thursday it will closely coordinate with the British government on the NuGen project, while monitoring the liquidation process with KEPCO.
On the LNG project, Toshiba did not identify the buyer, saying that it was a foreign entity and will be announced later in the day. It will be paying the buyer $800 million to assume its commitment to purchase 2.2 million tonnes per year of the fuel from Freeport LNG in Texas.
The company has spent years trying to either sell the gas to power customers or offload the business after signing the 20-year contract to buy LNG from Freeport.
The Nikkei business daily reported on Thursday, without citing a source for the information, that the buyer is a unit of Chinese gas company ENN Group. An ENN Group spokesman said when contacted by Reuters that he was not aware of the deal.
Nigeria’s Borrowing Remains Relatively Low At 19% – Minister
Minister of Finance, Zainab Ahmed, has said Nigeria’s borrowing still stands at 19 per cent of the Gross Domestic Product (GDP). She said this level is low compared to debt levels in Ghana, Brazil, South Africa, Egypt and Angola.
The minister also said there is no plan to remove fuel subsidy. She said the International Monetary Fund merely advised the federal government to remove fuel subsidy but assured Nigerians fuel subsidy removal plans are not even being considered at this time.
On the question of the country’s debt level, the minister said Nigeria’s borrowing is still at 19 per cent of GDP. She said this is still within the country’s fiscal responsibility act which allows a maximum of 25 per cent of GDP.
The minister said Nigeria has the lowest level of borrowing compared to other countries.
Inflation Nightmare Returns To Haunt Zimbabwe
The price of bread almost doubled for Zimbabweans last week, as the inflation nightmare that marked the rule of long-time authoritarian leader, Robert Mugabe, returns to haunt his successor, Emmerson Mnangagwa.
There have been warnings of the mental and physical toll the rampant price increases will have on Zimbabweans after the cost of a loaf of bread basically doubled to three and a half dollars, and a tub of butter shot up to $17 from eight fifty.
Mnangagwa pledged to revive his country’s moribund economy when Mugabe was toppled in 2017 after 37 years in power.
But after the central bank unveiled a new monetary policy in February, introducing a new local currency, prices of goods and services have skyrocketed at rates unseen in a decade.
The disparity between the official and parallel market exchange rates has been rapidly widening, triggering price hikes of up to 300 percent.
The chief of the Zimbabweauthoritarian leader, Robert Mugabe, says he is angry at the government for “putting on a brave face and giving the impression that the economy is on a rebound, but on the ground things are going in the opposite direction.”
The crisis has brought back memories of a decade ago when hyperinflation peaked at a grotesque 500 billion percent, wiping out the Zimbabwean dollar.
Inflation Rate Jumps To Almost 67% In Zimbabwe
Zimbabwe’s statistics agency, said on Monday, year-on-year inflation rate, for March, has spiked, to almost sixty-seven percent under, the new base used to calculate the consumer price index. The agency noted that under the old basing system it used until February this year, the rate had shot up to a hundred sixty-six percent, confirming that Zimbabwe was already in a hyper-inflation environment.
An economist, Steve Hankie, posted on twitter that the actual inflation rate was more than 200%. He said this is the second highest annual inflation rate in the world.
Another economist, Kipson Gundani, says the current inflation figures were emanating from confidence deficit bedeviling the economy.
This new inflation rate may not be a shock to Zimbabwean. In 2008, the country’s inflation reached 500 billion percent, rendering the local currency worthless and eroding savings and pensions.
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