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Toshiba to take more than $800 million loss to exit U.S. LNG business


By Tsukimori and Jessica Jaganathan

TOKYO/SINGAPORE (Reuters) - Japan's said on Thursday it will pay more than $800 million to an unidentified overseas "buyer" to exit its U.S. liquefied natural (LNG) business as part of a five-year plan to shed money-losing assets.

The sale is the disappointing culmination of a venture that puzzled analysts when it was announced in 2013. Asian LNG prices have plunged 42 percent in the past five years. The potential for future losses spurred Toshiba's exit, the company said in a statement.

Under the deal, Toshiba will transfer to the its unit and its roughly $7 billion commitment starting in 2020 to purchase 2.2 million tonnes per year of the fuel over 20 years from LNG in Toshiba will pay the buyer a one-off payment of $821 million, or about 93 billion yen, the company said.

The company booked a charge of 93 billion yen ($818 million) for exiting the LNG business in its earnings it announced on Thursday.

reported on Thursday, without citing a source for the information, that the buyer is a unit of Chinese company

However, Toshiba said in its statement that it would only identify the buyer when the final sales contract is signed.

An said he was not aware of the deal when contacted by The company has spent years trying to either sell the to power customers or offload the business the contract.

Toshiba's annual cost of its deal with was a bit over $360 million dollars, meaning the company is paying about two years of those costs to ENN to take the obligations, said Nicholas Browne, of gas and LNG at

"For ENN this represents a relatively low cost and immediate way to source significant U.S. volumes," Browne said. "For Toshiba, it clearly ends their short foray in the LNG business.

"ENN has been very open that it plans to set up an LNG trading business. As such, these volumes will contribute to their portfolio and some will not end up in "

Still, the deal is a "positive sign for U.S. LNG developers that is still open for business," amid a trade war between the world's two-biggest economies.

Toshiba stunned the market in 2013, when it decided to enter the LNG business. With no experience in shipping or the logistics of the gas and LNG business it seemed an odd fit, analysts said at the time.

Toshiba's plan was to pitch LNG supplies as a sweetener to likely Asian buyers of its turbines used in combined

"The company probably wanted to add value to its power plant business by selling not only the power plants but also fuel, but for plant builders, it's always better to do it all via tenders," said Junzo Tamamizu, of in

($1 = 113.7200 yen)

(Additional reporting by Makiko Yamazaki in and Meng Meng in BEIJING; Writing by Aaron Sheldrick; Editing by Christian Schmollinger)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, November 08 2018. 11:54 IST