Japan’s Toshiba to sell US LNG business to stem losses

Japanese conglomerate Toshiba is set to sell its US liquefied natural gas (LNG) business as part of its plans to divest troubled assets under a new five-year business strategy.

The company did not name the buyer. However, Reuters reported that the LNG business will be acquired by China’s ENN Ecological Holdings.

The proposed sale will mark Toshiba’s exit from LNG business in the US.

Under the deal, ENN will purchase all of the outstanding shares of Toshiba America LNG for $15m.

Following the completion of the sale, Toshiba will have to make a one-off payment of $821m to assume its LNG offtake obligations under a contract signed with Freeport LNG in 2013.

Under the contract, Toshiba agreed to buy 2.2Mtpa of LNG for a period of 20 years.

Through the sale, the company intends to focus its resources on key growth areas.

The firm positioned the US LNG division as non-core and noted that the unit does not offer synergies with its other businesses.

In a statement, Toshiba stated: “In reaching its decision, Toshiba weighed at the full the alternatives of withdrawal from the business by the transfer or by cancelling the liquefaction agreement and the LNG related agreement, or continuing the business by its own.”

The decision was also taken in view of future losses caused by potential deterioration in market conditions, the company noted.

Toshiba CEO Nobuaki Kurumatani was quoted by Reuters as saying: “The project posed a huge risk because no-one knows how the situation will be over the next 20 years.”

The firm expects to complete the transaction by 31 March next year.

In a separate move, the company announced plans to liquidate its UK nuclear development division NuGen after failing to find a suitable buyer.