...July 23, 2023 We kept our rating on Toshiba on CreditWatch with negative implications: This is because a tender offer by a special purpose company (SPC) established by Japan Industrial Partners Inc. (JIP) has yet to be initiated. Implementation of the tender offer would deteriorate Toshiba's financial standing significantly: Toshiba would be obliged to repay a volume of debt that would account for a significant portion of the funds, which total nearly Ñ2 trillion, raised for the share purchases by the SPC. If the SPC raises about Ñ1 trillion through debt issuance, as media have reported, Toshiba's debt-to-EBITDA ratio will likely substantially deteriorate to above 5x in fiscal 2023 (ends March 31, 2024), in our view. The ratio was 1.4x at the end of fiscal 2022. Toshiba's earnings for fiscal 2023 remain uncertain: We expect its energy and infrastructure business, which is less susceptible to economic downturns, to perform solidly. Meanwhile, we see downside risk in the company's hard disk...
