Toshiba is liquefying the British nuclear power unit and selling its US LNG project as the company seeks to dispose of distressed assets and restore investor confidence.

 

The plans are part of a new five-year strategy announced by Toshiba on Thursday, which also includes the cancellation of 7,000 jobs or 5 percent of the workforce in five years.

 

The company jumped 13.7 percent to close to a two-year high after the announcement and also backed a move to buy back about 40 percent of the company's shares as of Friday. The stock closed at 12.7 percent.

 

Toshiba is trying to restore market confidence after an accounting scandal in 2015 that revealed widespread irregularities across the company.

 

The scandal forced the company to acknowledge a huge cost overrun in its US nuclear power unit and bankrupt Stinghaus, prompting it to sell its precious memory module earlier this year to a consortium led by US private equity firm Pine Capital, leaving the company with only a few lucrative sectors.

 

"There have been reports of possible selling of distressed sectors and job cancellations, so these steps were expected at some point," said Hiroyuki Fukunaga, chief executive of Investrest Financial Consultancy. But investors are optimistic.

 

"The announcement of a repurchase of about 40 percent of the shares is also definitely positive."

 

Toshiba has pledged to repurchase 700 billion yen worth of shares this year but has not set a date. The announcement appeared to outperform earnings expectations as the company said it now expects a full-year operating profit of 60 billion yen, compared to an initial forecast of 70 billion yen.

 

Curbing losses

Toshiba is trying to dispose of distressed assets that could expose the company to future losses.

 

But the decision to liquidate the Nujin unit would be a blow to Britain's plans to build a nuclear power plant aimed at saving 7 percent of the electricity supply. Reuters was the first to mention last month that Toshiba was considering liquidating Nogin.

 

KEPCO is in talks with Toshiba to buy a stake in Nogin. South Korea's energy ministry said on Thursday it would coordinate closely with the British government on the Nujin project and would follow up the process of liquefying the unit with KEPCO.

 

Toshiba did not mention a buyer for the LNG project but said it was a foreign entity and would be announced later on Thursday. Toshiba will pay $ 800 million to the buyer to fulfill its commitment to buy 2.2 million tonnes per year of fuel from Freeport LNG in Texas.

 

The Nikkei newspaper reported on Thursday that the buyer was a unit of the Chinese gas company INN Group, but did not give the source of the information.

 

When Reuters contacted an ING group spokesman for inquiries, he said he had no knowledge of the deal