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Toshiba names next CEO amid transformation push

Toshiba names next CEO amid transformation push

Kurumatani is expected to step into his dual roles with the company at the beginning of April

Embattled Japanese tech giant, Toshiba, has named Nobuaki Kurumatani, a former executive of Sumitomo Mitsui Financial Group, as its next chairman and chief executive.

The company’s incumbent CEO, Satoshi Tsunakawa, will become chief operating officer and retain his role as president, the company said.

Kurumatani, currently the president of the Japanese arm of European private equity firm CVC Capital Partners, is a former deputy president of Sumitomo Mitsui Banking Corp, one of Toshiba's main lenders, which often have a strong influence on its management decisions.

Kurumatani is expected to step into his dual roles with the company at the beginning of April.

Toshiba told shareholders that the new appointment would help to underpin its efforts to overhaul its business and financial postures.

“Toshiba Group is currently engineering major transformations to its business portfolio and capital formation,” the company told shareholders in a statement issued on 14 February.

“In order to continue its commitment to contributing to a sustainable society through its business and technology, the group must effectively secure a strong financial platform, and nourish the businesses that will drive future growth.

“In executing these objectives, the board recognises that Toshiba must proactively take in outside perspectives and views, and decided to appoint a CEO with a proven track record of achievement and a business perspective shaped outside Toshiba Group.

Kurumatani, as the company’s next chairman and CEO, will be responsible for establishing strategies for growth in the medium to long-term.

The move comes amid a tumultuous period for the company.

Toshiba moved to put its flash memory business stake up for sale last year in a bid to cover massive losses incurred by its Westinghouse Electric Company nuclear power subsidiary.

Toshiba agreed in late September to sell Toshiba Memory, the world's second-biggest producer of NAND chips, to a consortium led by Bain Capital LP for US$18 billion to cover billions of dollars in liabilities arising from the now bankrupt US nuclear power unit.

Toshiba and its chip business partner, Western Digital, agreed in December last year to settle a long-running dispute that emerged over the Japanese firm’s plans to sell its chip unit, the companies said in a statement, removing a key obstacle to the deal.

It subsequently emerged in January that Toshiba could be considering publicly listing its prized memory chip business if the agreed US$18 billion sale of the unit to Bain Capital fails to gain antitrust approval by the end of March, according to reports by the Financial Times (FT).

Bain Capital, meanwhile, previously said it aims to list Toshiba Corp's chip unit on the Tokyo Stock Exchange within three years, to cash in its investment after leading its proposed US$18 billion acquisition of the business.

Meanwhile, bolstered by its chip business, the struggling industrial conglomerate has also predicted net profit of 520 billion yen (US$4.9 billion) for the year ending March, up from a prior forecast of a 110 billion yen loss and much higher than a consensus estimate of a 188 billion yen profit.

The revised estimate comes on the back of a sale of Toshiba's claims against now-bankrupt Westinghouse Electric Co LLC to a group of hedge funds, a deal that also affords the Japanese firm tax benefits.

The return to net profit, combined with an additional 600 billion yen gained from the issue of new shares to overseas funds, will help Toshiba avoid falling into negative net worth for a second consecutive year, allowing it to remain a listed company.

The revised estimates also showed, however, that without the memory chip division, its annual operating profit is set to be zero.

(With Reuters; Reporting by Makiko Yamazaki; Editing by Muralikumar Anantharaman)

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