SAN FRANCISCO, Dec. 25, 2020 — Today, an affiliate of Farallon Capital Management, L.L.C. ("Farallon") requested Toshiba Corporation ("Toshiba" or the "Company")(6502.T) convene an extraordinary general meeting of shareholders ("EGM") to seek shareholder approval regarding significant changes to the Toshiba Next Plan ("TNP") relating to a new one trillion yen growth investing plan.

Farallon has continued constructive discussions with Toshiba as a major shareholder since 2017, including recommending the appointment of Mr. Raymond Zage, who previously served as CEO and Managing Director of Farallon Capital Asia, to the Toshiba Board of Directors.  Mr. Zage was appointed as a director of Toshiba at the Annual General Meeting held in June 2019.

Farallon commends Toshiba for successfully reinforcing its internal controls, improving its financial condition, reviewing its business portfolio, and improving its profitability through structural reforms.  As set forth in the TNP under the leadership of CEO Nobuaki Kurumatani, these initiatives were implemented with the purpose of "maximizing enterprise value as an infrastructure services company."

Farallon is, however, deeply concerned that on November 11, 2020, Toshiba suddenly announced a growth strategy that was materially different from that described in the TNP.  Specifically, Toshiba announced that funds amounting to approximately one trillion yen will be used for large-scale M&A, without providing any reasonable explanation as to why such a strategy change was warranted or how it would increase corporate value.  This shift was in marked contrast to the growth strategy committed to and announced in the TNP that focused on a disciplined capital policy and targeted growth through organic expansion and small-scale, programmatic M&A (instead of large-scale M&A).

The current directors of Toshiba are appointed on the basis of a public commitment to the TNP and a significant change to the TNP not approved by shareholders is wholly inappropriate and a rebuke of the trust shareholders have placed in management and the Board to implement the TNP. Shareholders have reason for concern.  Toshiba has recorded a total of approximately 1.8 trillion yen of impairment losses in the past 20 years resulting from heedless growth investments through large-scale M&A, which have led to a reduction of shareholder capital and a crisis of solvency.  Shareholders have already expressed views around the Company’s capital policy.  At the Company’s Annual General Meeting in July 2020, a proposal to amend Toshiba’s Articles of Incorporation to enable a general meeting of shareholders to resolve matters concerning Toshiba’s capital policy was adopted with near unanimous affirmative votes (97.74%).  This result strongly indicates that the shareholders of Toshiba believe that significant changes to the TNP around Toshiba’s capital policy should not be made by management without shareholder input, but instead should be determined through a general meeting of shareholders.

Accordingly, Farallon has concluded that since Toshiba has significantly changed the TNP without any reasonable explanation to its shareholders (and has not even offered clear criteria or a policy for how it proposes to evaluate such large-scale M&A), it is imperative that Toshiba’s Board fully articulate its intentions, explain its new growth strategy and seek shareholder feedback on those plans.  Until shareholders approve a revision to the TNP, Toshiba should continue with the promises it made and pursue a disciplined capital policy focusing on organic growth and programmatic M&A.

Farallon has always sought to have a constructive dialogue with Toshiba, with an aim to improve mid to long-term enterprise value, and will continue to seek to do so.

About Farallon

Farallon Capital Management, L.L.C., is a global investment firm founded in 1986 and registered as an investment advisor with the United States Securities and Exchange Commission since 1990.  Farallon seeks investments across asset classes and around the world through a process of bottom-up fundamental research and analysis emphasizing capital preservation.  More information on Farallon is available at www.faralloncapital.com.

Disclaimer

Information contained herein is based on public information. Chinook Holdings Ltd., Farallon Capital Management, L.L.C. and their affiliates and representatives (collectively, "Farallon") do not guarantee its accuracy, completeness, adequacy or exhaustiveness.  This press release represents the views, estimates and opinions of Farallon only, which may change.  It should not be relied upon for any purpose and should not be construed as investment, financial, legal, tax or other advice.  Nothing in this press release should be construed as an offer, invitation, marketing of services or products, advertisement, inducement or representation of any kind, nor as investment advice or a recommendation to buy or sell any investment products or make any type of investment in securities.  

This press release should not be construed as soliciting any other Toshiba shareholder to authorize Farallon or any third party to exercise voting rights on such shareholder’s behalf with respect to any matter proposed to be presented to shareholders as indicated in the Request for Convocation of Extraordinary Meeting of Shareholders. This press release is not intended and should not be considered to solicit, encourage, induce or seek for Toshiba shareholders to authorize Farallon or any other third party as their proxy in exercising their voting rights on their behalf.

Farallon is not soliciting or requesting other shareholders of Toshiba to jointly exercise their shareholders’ rights with Farallon (including, but not limited to, voting rights). Farallon declares that it does not intend to be treated or deemed a "joint holder" (kyo-do hoyu-sha) with other Toshiba shareholders under the Japanese Financial Instruments and Exchange Act.

Media Contacts

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ASC Advisors

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