Another big Toshiba shareholder calls for major change
3D Investment Partners wants to sell, labels company a 'governance embarrassment for Japan'
One of Toshiba’s largest shareholders has called upon the company's board to solicit bids to acquire all or part of the ailing Japanese giant.
The shareholder in question is 3D Investment Partners, which owns 7.6 per cent of Toshiba. On Wednesday it spelled out its disappointment in an open letter that notes shareholders have now opposed four turnaround plans proposed by management.
The letter expresses 3D's displeasure as follows:
Once an iconic Japanese company, Toshiba has become a corporate governance embarrassment for Japan. It is time for the board to take decisive action to restore Toshiba's reputation.
The letter wants Toshiba's board to take three actions before its June annual general meeting: developing and disclosing a mid-range plan that reflects the company’s opportunity; soliciting indications of interest from buyout firms; and consulting with shareholders concerning the board's composition.
The firm demands all that done before Toshiba's June 25 annual general meeting. It has called for consultation to include those who have expressed concerns about the company's governance or strategy, and asked Toshiba's board to take shareholder sentiment into account when considering appointments.
"The Board should not unilaterally determine whom to nominate to the Board including the nomination of Taro Shimada (President and CEO) and Goro Yanase (Vice President and COO), given the lack of trust and progress over the last year," the letter states.
The firm also stated that potential buyers should provide not only preliminary indications of interest, but also valuation ranges, prior to the AGM. It promised any credible offer would receive materials and cooperation from management to help reach a proposal.
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3D's letter comes after its efforts to secure approval for a potential private equity buyout was narrowly defeated at a shareholders' meeting in March. A turnaround plan devised by Toshiba management was also voted down, leaving the company with no clear direction.
Toshiba has so far resisted going private and instead attempted to break the company into three smaller ones. Once that plan was rejected, it tried and failed to arrange a two-way split.
Toshiba's tortured turnaround attempts follow years of scandals that involved government ministers, the meltdown of finances at its nuclear power business, and the removal of board members.
Effissimo, Toshiba's largest shareholder, has already signed a conditional deal to sell its almost ten per cent stake to American private investment firm Bain Capital, in the hope it drives a takeover. Bain has reportedly been shopping around to the other shareholders, but has acknowledged there were "issues that needed to be resolved to launch a bid to take Toshiba private." ®