Hong Kong fund tells Toshiba that chip unit sale to Bain group not necessary

A Hong Kong-based activist investor in Toshiba Corp. told the besieged conglomerate that the $ 18 billion sale of its chip to a group led by Bain Capital is no longer necessary after its recent capital injection, according to a Reuters letter.

Argyle Street Management Ltd, a $ 1.2 billion hedge fund under management, sent the letter to Toshiba's board of directors on Monday night, Reuters chief investment officer Kin Chan told Reuters. The fund declined to say how many shares Toshiba has.

The first activist shareholder to openly oppose the sale, Argyle invites the more than 30 foreign investors who participated in the recent issue of shares of 600 billion yen ($ 5.3 billion) to associate and is already in talks with at least three funds that share the same point of view, Chan said.

Toshiba has agreed to sell Toshiba Memory – the world's number one. 2 NAND chips producer – to the Bain consortium to cover multi-billion dollar debt from Westinghouse, its now-defunct US nuclear power plant.

Toshiba also received a $ 5.4 billion injection of funds from foreign funds this month, which, given the write-offs, allows it to cover its commitments.

Argyle believes "that there is more urgency to undertake a Toshiba memory sale," says the letter, which proposes a meeting with Toshiba's board of directors in December or January.

The $ 18 billion price for smart unit "significantly underestimates the business," says the letter, adding that the board should instead consider an IPO for Toshiba Memory.

The representatives of Toshiba and Bain were not immediately available for comment.

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