Toshiba on Friday announced that it's spinning off part of its flash memory business and will sell a stake in the new business to offset major cost overruns from its US nuclear business.
Toshiba plans to split off the memory business (including the SSD business, but excluding the image sensor business) by March 31. The company has yet to decide which assets and liabilities will be split off, though it plans to sell less than 20 percent of the business, Reuters reports.
Toshiba's NAND flash memory business makes up most of Toshiba's operating profit and is the world's second largest, behind Samsung.
The company needs cash, it explained, to make up for losses related to an acquisition within its US nuclear division that "could reach several billion US dollars."
"Splitting off the Memory business into a single business entity will afford it greater flexibility in rapid decision-making, and enhance financing options, which will lead to further growth of the business and maximize the corporate value of Toshiba Group," the company argued.
The company will hold a shareholder meeting in late March to seek approval for the plan. If it doesn't complete a sale by the end of the financial year in March, shareholder equity could be wiped out.
Meanwhile, Reuters reports, Toshiba's Westinghouse division -- responsible for the nuclear projects that went south -- will come under direct CEO supervision.
News of the spinoff comes just over a year after Toshiba initiated a major restructuring effort, prompted by another controversy: In September 2015, the company admitted to overstating its profits by almost $2 billion over the course of seven years. As part of the restructuring effort, Toshiba sold off its PC business and let go thousands of employees.