Toshiba

Standard & Poor’s has downgraded Toshiba’s credit ratings again, warning that the troubled conglomerate could miss debt payment deadlines as losses at its U.S. nuclear unit worsen.

S&P said Friday it had lowered Toshiba’s long-term credit rating by two notches to CCC-, pushing it further into junk status after previous downgrades in December and January. The rating on senior unsecured debt dropped three notches to CCC-.

“The downgrade this time reflects our view that absent unanticipated, significantly favorable changes in the issuer’s circumstances, there is a growing likelihood that Toshiba will become unable to fulfill its financial obligations in a timely manner or will undertake a debt restructuring we classify as distressed in the next six months,” the rating agency said in a news release.

Since December, Toshiba has been restructuring its businesses to plug its impaired shareholders’ equity and stabilize its finances. It said last month it might sell a controlling stake in the U.S. nuclear power business, Westinghouse Electric.

Massive losses at Westinghouse caused by cost overruns at U.S. power projects have forced Toshiba to take a $6.3 billion writedown.

But S&P said the specifics of any sale “are unclear and we do not rule out the possibility that Westinghouse might file for Chapter 11 bankruptcy under U.S. law. As the parent company, Toshiba is a guarantor for Westinghouse’s external debt and, therefore, we see a growing likelihood that the risk of contingent liabilities will materialize in the future.”

Toshiba’s has also struggled recently with the decline of its consumer business and an accounting scandal tied to about $1.2 billion in overstated operating profits.

Before S&P announced the latest, Toshiba’s beleaguered shares closed 3.5% higher on Friday on reports that the Japanese government is considering using state money to support the spinoff of Toshiba’s memory chip business.

The stock is in danger of being delisted by both the Tokyo and Nagoya exchanges unless Toshiba improves its internal controls. The company has still not published its fourth-quarter results, which were originally due in mid-February.

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