Toshiba Corporation announced that Toshiba Samsung Storage Technology Korea (TSST) has filed for corporate rehabilitation proceedings with the Seoul Central District Court.

Related news: Toshiba and Samsung Sell TSST Optical Disc Drive Business

For more information visit: www.toshiba.com; www.tsst.co.kr

Unedited press release follows:

Notice of Start of Proceedings on Corporate Rehabilitation of Toshiba Samsung Storage Technology Korea Corporation

May 12, 2016 — TOKYO — Toshiba Corporation (TOKYO: 6502) has announced that Toshiba Samsung Storage Technology Korea (TSST-K), a Korea-based subsidiary of Toshiba Samsung Storage Technology (TSST), following a May 11 decision by its board of directors, today filed for corporate rehabilitation proceedings with the Seoul Central District Court. TSST is a joint venture between Toshiba Corporation and Korea’s Samsung Electronics Co., Ltd. (Samsung), and a Toshiba Group company, with 50.1% of its outstanding shares held by Toshiba. Further details are as follow.

1. Background
TSST was established as a joint venture between Toshiba and Samsung, with the parent companies holding 51% and 49% of the company’s stock, respectively. TSST-K was subsequently established as a wholly-owned subsidiary of TSST, and engaged in the optical disc drive (ODD) business. As demand for ODD has fallen, resulting in a significant deterioration in TSST-K’s performance, Toshiba decided in March 2014 to withdraw from the ODD business, and to carry out a series of stock transactions that would transfer full ownership of TSST-K to Korea-based OPTIS Inc. (Optis), a manufacturing partner, by 2017.

Based on this agreement, 49.9% of TSST-K’s stock has been transferred to Optis. However, Optis’s management initiatives and efforts to rebuild the business have been undermined by deep declines in product demand and prices.

2. Total liabilities
TSST-K’s liabilities total approximately 9.0 billion yen.

3. Appraised value of equity
Toshiba recorded an impairment loss for TSST-K in FY2013, and the current book value of TSST-K’s stock is approximately 100,000 yen.

4. Impact on Toshiba’s performance
The company has recorded an allowance to its accounts receivable in respect of TSST-K of approximately 600 million yen (as of the end of March 2016). Toshiba does not hold any financial guarantees or other contractual obligations with regard to the liabilities of TSST-K, and TSST-K’s liabilities will have no financial impact on Toshiba.

5. Outline of TSST-K

6. Future Outlook
The court will announce its decision on corporate rehabilitation proceedings within a month from today’s date. Unless the court dismisses TSST-K’s filing, TSST-K’s management will then meet with its creditors and other interested parties and present the corporate rehabilitation plan.