Tokyo, Mar 2, 2009 (JCN) - Toshiba Corp. may issue new shares to bolster its battered capital base. The company warned last month it would post a US$3 billion net loss in the year to end-March, hit by sliding demand for semiconductors and electronics.
That warning triggered downgrades by rating agencies Standard & Poor's and Moody's Investors Service, citing Toshiba's dwindling capital and a near-US$20 billion debt burden.
Toshiba has been issuing commercial paper since last month and could, in theory, take on more loans, but banks are likely to be wary about piling more debt on to a capital structure so light on equity.
Toshiba's shareholders' equity ratio will likely fall into single digits in the year to March, while struggling rivals NEC Corp and Fujitsu have been able to keep their ratios above 20 percent.
A 300 billion yen (US$3.1 billion) issue would dilute share value by nearly 40 percent. The stock has lost about 70 percent in the past year.
Toshiba may eventually need up to 1 trillion yen (US$10.3 billion) to keep investing in NAND flash memory, which is used in mobile phones and portable music players like Apple Inc's iPod.
Copyright © 2010 JCN. All rights reserved. A division of Japan Corporate News Network KK.
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