The Japanese government said it was not considering steps to support embattled Toshiba Corp and will share information with Washington on developments involving the firm and its US nuclear unit Westinghouse.
But Chief Cabinet Secretary Yoshihide Suga added the government would closely monitor the sale of Toshiba’s chips business – the world’s biggest NAND flash memory producer after Samsung Electronics Co.
While the government has been adamant that it will not be stepping in to rescue Toshiba, sources familiar with the matter have said a state-backed fund may invest as a minority shareholder to prevent a sale to bidders deemed risky to national security.
“Toshiba’s chip business is highly competitive globally and important in terms of keeping jobs in Japan,” Suga told a news briefing. “Flash memory is also expected to increase in importance from the standpoint of information security.”
Toshiba’s crisis has only deepened this week.
It missed submitting audited third-quarter earnings for a second time and said it would consider selling a majority stake in Westinghouse which is at the centre of its financial troubles.
Sources have said bankruptcy lawyers have been hired as an exploratory step for Westinghouse which has been plagued by huge cost overruns at two US projects in Georgia and South Carolina. Toshiba has flagged an upcoming $6.3bn writedown for the nuclear unit and is worried about the future potential losses.
The Yomiuri newspaper reported earlier yesterday that the White House was opposed to a Chapter 11 filing for Westinghouse, citing an identified source familiar with Department of Commerce deliberations.
Suga said he was not aware that this was the White House’s stance.
The agreement to share information was reached between a meeting with Trade Minister Hiroshige Seko and US Commerce Secretary Wilbur Ross as well as other US officials on Thursday. 
Meanwhile, Standard & Poor’s cut its credit rating on Toshiba again yesterday, warning that the troubled company’s finances were quickly deteriorating owing to huge losses at its US nuclear unit.
The ratings agency slashed its outlook on the Japanese industrial giant by two notches to ‘CCC-’, pushing it further into junk status after earlier downgrades in December and January.
Loss-hit Toshiba, a pillar of corporate Japan, could be running out of options for turning around its business or securing emergency bank funding, it added.
“There is a growing likelihood that Toshiba will become unable to fulfil its financial obligations in a timely manner or will undertake a debt restructuring we classify as distressed in the next six months,” S&P said.
Toshiba’s multi-billion-dollar losses are likely to multiply, it added, as it faces the embarrassing prospect of being delisted from the Tokyo Stock
Exchange.
“The heavy losses and financial burden related to Toshiba’s US nuclear power business will grow further, increasing uncertainty about (its) prospects for restructuring and bank support,” S&P said.
The downgrade comes after Toshiba’s beleaguered shares rebounded earlier yesterday, closing 3.5% higher, on reports that Tokyo is mulling using state money to support the spinoff of its prized memory chip business.
The government denied the reports.
“The specifics of its plan to sell its (memory chip) business have yet to be determined and it will be some time before the proceeds of a sale materialise,” S&P said.
Toshiba shares have been hammered this year, losing more than half their value since late December when it first warned of eye-popping losses at atomic division Westinghouse Electric – and pointed to a possible accounting fraud.
The company is probing a whistleblower’s claims that one or more Westinghouse executives exerted “inappropriate pressure” on the division’s accounts. This week, Japanese financial regulators gave Toshiba until April 11 to publish its fourth-quarter results, which were originally due in mid-February.
Toshiba had said it needed more time to probe claims of misconduct at Westinghouse and gauge the impact on its finances before reporting its numbers.
Toshiba has previously warned it was on track to report a net loss of ¥390bn in the fiscal year to March, as it faced a writedown topping ¥700bn at Westinghouse.