Apple Inc. (AAPL) Reportedly Holding Up Toshiba Chip Unit Deal

Apple Inc. (AAPL) Reportedly Holding Up Toshiba Chip Unit Deal

Reuters is reporting that Apple has not finalised the way it will participate, causing Toshiba to go to its banks so as to obtain a rollover of an existing ¥680bn ($6.1bn) credit arrangement.

SK Hynix will invest a total of 4 trillion won (US$3.6 billion) in Toshiba Memory in Japan.

Western Digital, which jointly invests in Toshiba's Yokkaichi flash memory plant in Mie Prefecture, filed a request for arbitration with the worldwide court in May to block Toshiba from selling its chip unit on the grounds that the sale would breach their joint venture contract.

In the first place, a concern was raised that SK Hynix might make financial investment only without securing voting rights to Toshiba Memory as the Japanese government will hate to see a Korean company that is a rival to Japanese companies secure voting rights.

Apple's backing is valuable as it is one of the world's biggest single buyers of NAND flash storage.

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Toshiba may have settled on a bid from a consortium led by private equity firm Bain Capital for its semiconductor business, but the owner of its longtime partner in NAND flash development is still working to prevent the sale.

Consortium members Apple, Dell Inc [DI.UL], Seagate Technology Plc STX.O and Kingston Technology, will invest in the form of non-convertible preferred shares, it said.

September 20 arbitration: Western Digital wants to block Toshiba from going alone on constructing a new memory chip plant called Fab 6. Both companies withdrew their support from Bain amidst the lawsuit Toshiba is facing with Western Digital.

It claims that its manufacturing joint venture agreement with Toshiba Memory Corporation - acquired via its $16bn acquisition previous year of SanDisk - gives it a right of veto over any sale of the company, a claim that Toshiba rejects. If WD wins the case, it will give rise to the worst case - disabling Toshiba from taking care of excessive liabilities by the end of March, 2018 and subsequently delisting Toshiba from the Tokyo Stock Exchange.

The Japanese conglomerate is expected to seal a deal with the Bain Capital-led group soon.

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