Toshiba Corp. said it was facing regulatory hold-ups in its planned off-loading of its US liquefied natural gas business in Texas to a Chinese company, including a tolling agreement for the Freeport LNG project.
The Japanese conglomerate said it was facing complications as the group also attempts to restructure its widespread business operations.
Toshiba, attempting to emerge from a crisis caused by an accounting scandal and massive losses in the nuclear business, is currently in a five-year recovery plan and is set to pay China’s ENN Group to take over a 20-year tolling agreement at the Freeport plant on Quintana Island.
The ENN Group has agreed to accept over $800 million to assume Toshiba’s commitment to the 20-year deal that would amount to 2.2 million tonnes per annum of LNG from the Freeport facility under a liquefaction tolling agreement (LTA) structure.
Under the original plan, the Toshiba-ENN transaction was expected to be completed by the end of March 2019.
Toshiba now says it is facing a delay in securing approval from the Committee on Foreign Investment in the United States, a federal agency that examines the national security implications of foreign investments.
Toshiba had hoped the losses on its LNG investment would not be carried over from the previous fiscal year to the coming business year.
The Japanese group entered the LNG market in 2013 by signing its agreement with Freeport.
ENN Group is a natural gas and LNG market participant listed in Hong Kong.
In China, ENN supplies gas in cities, operates pipelines and engages in gas trading. It is trying to diversify its supply sources by purchasing the Toshiba operations.
Toshiba now say that it hoped to complete the transfer of its interests in the LNG business before the end of April 2019 or shortly thereafter.
The Toshiba deal with ENN involves concluding a purchase and sales agreement for the transfer of all outstanding shares of Toshiba America LNG Corp. to ENN.
Toshiba is making a provision for a 93 billion yen ($838M) loss on its Freeport LNG accord and related activities.
