Toshiba may not finalise chip unit sale by Aug. 31 deadline - sources

By Taro Fuse

TOKYO (Reuters) - Toshiba Corp may not seal a $17.5 billion deal to sell its memory chip unit by a self-imposed Aug. 31 deadline due to disagreements over details of an offer by the bidders, people familiar with the matter said late on Tuesday.

Talks with a consortium led by Western Digital Corp were in final stages, with the head of the U.S. firm in Japan to hammer out details, the sources said, requesting anonymity because they were not authorised to speak with media.

The two sides, however, could not yet agree on specifics such as the size of Western Digital's future stake in the business, they said, while adding the two sides would continue negotiating.

A Toshiba spokesman said the company could not comment on details of the talks. A Western Digital representative declined to comment.

Toshiba has been trying to sell the unit for months to pay down debt and cover the impact of over $6 billion in liabilities linked to U.S. nuclear arm Westinghouse.

Toshiba wants to close the sale by the end of the fiscal year in March to ensure it does not report negative net worth, or liabilities exceeding assets, for a second year running. This could result in a delisting from the Tokyo Stock Exchange.

Given regulatory approvals could take six months, the company has been hoping to reach a deal by the end of August to ensure it can close the sale in time.

In addition to Western Digital, the consortium includes U.S. private equity firm KKR & Co and the state-backed Innovation Network of Japan and Development Bank of Japan. Sources have said the group was offering around 1.9 trillion yen ($17.5 billion) for the business.

($1 = 108.6900 yen)

(Reporting by Taro Fuse and Makiko Yamazaki; Writing by Ritsuko Ando; Editing by Mark Potter)