China's ENN Ecological to scrap plan to buy Toshiba's LNG business

TOKYO -- Toshiba Corp. said Thursday that Chinese chemicals maker ENN Ecological Holdings Co. will scrap a plan to buy its liquefied natural gas operations in the United States.

The Chinese company notified Toshiba of its decision, citing "considerable uncertainty" partly caused by the delayed completion of the purchase, Toshiba said.

The deal, initially planned to be wrapped up by the end of March, has yet to be closed due to the prolonged approval process by the Committee on Foreign Investment in the United States.

Toshiba said last November it would sell Toshiba America LNG Corp. to ENN Ecological for $15 million as part of restructuring steps and would pay about 93 billion yen ($836 million) to the Chinese company, given the risk the business would be unprofitable with a future drop in LNG prices.

The Japanese company had planned to book the payment as a special loss in the fiscal year that ended in March but it will estimate the impact of the cancellation of the deal on its earnings.

Toshiba is in the midst of revamp efforts to get back on its feet after suffering huge losses in the U.S. nuclear power business.

In 2013, the company said it signed a deal with a U.S. firm to secure rights to process U.S.-produced natural gas into 2.2 million tons of LNG annually over 20 years from 2019.

Toshiba aimed to procure the LNG for Japanese utility companies for power generation, but LNG prices have since declined, making it difficult to make the operation profitable.

Source: https://mainichi.jp/english/articles/20190412/p2g/00m/0bu/038000c