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

Toshiba Corporation has announced that Toshiba Samsung Storage Technology Korea, a Korea-based subsidiary of Toshiba Samsung Storage Technology (TSST), following a May 11 decision by its board of directors, 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.

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 fullownership 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 bydeep declines in product demand and prices.

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

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.

Impact on Toshiba’s performance
The company has recorded an allowance to its accounts receivable in respect of TSST-K of approximately ¥600 million (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.

Outline of TSST-K

Company name	Toshiba Samsung Storage Technology Korea Corporation
Headquarters	Swon City, South Korea

Name and title of representative		Juhyung Lee, president and CEO
Business outline		Development and sales for optical disc drives, such as DVDs for PCs and computer equipment
Capital stock		10,728,565,000 Won (approx. ¥ billion)
Establishment		April 1, 2004
Shareholder composition		TSST 50.1%, Optis Inc. 49.9%
Relationship between Toshiba and TSST-K
		Capital	TSST-K is Toshiba Corporation’s non-consolidated subsidiary
		Personnel	Toshiba Corporation’s employee concurrently serves as the board member
		Business	There are no direct business relationship between Toshiba Corporation and TSST-K
Operating Performance and Financial Condition in the Last Three Fiscal Years (in Won)
Fiscal years	FY2012 (March 2013)		FY2013 (March 2014)	FY2014 (March 2015)
Net assets (equity)	57,167,961,313		28,689,646,076	24,956,079,623
Total assets	227,529,106,896		163,468,107,182	147,427,810,282
Shareholder’s equity per share	211,655		152,063	68,708
Net sales	996,825,525,875		814,761,157,100	554,508,360,975
Operating Income (loss)	-75,874,808,723		-37,196,440,625	-92,222,375,916
Recurring profit	-68,625,831,207		-28,478,315,237	-88,813,895,013
Net Income (loss)	-70,207,197,409		-28,478,315,237	-89,055,242,393
Net Income (loss) per share	-65,309		-26,491	-41,504

Outlook
The court will announce its decision on corporate rehabilitation proceedings within a month from now. 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.