Toshiba stock drops on $5 billion share sale plan

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Toshiba’s stock plummeted Monday, after the company announced plans to raise $ 5 billion to avoid being booted off the Tokyo Stock Exchange.

Shares in the Japanese firm fell more than 6% in Tokyo, before paring some of those losses to close down 5.8%.

The drop comes a day after the troubled conglomerate announced it would sell new shares worth 600 billion yen ($5.4 billion). Toshiba (TOSBF) will issue about 2.3 billion new shares priced at 262.8 yen ($2.35) per share, it said Sunday — about 10% cheaper than Friday’s closing price of 292 yen ($2.61).

The firm has until next March to dig itself out of massive debt and get its balance sheet in order, failing which it will have to stop trading publicly.

Seeking a major injection of cash is the latest survival move from Toshiba, which is dealing with a crippling financial crisis.

The struggling company agreed to sell its prized memory chip business in September, to a consortium led by private equity firm Bain Capital and backed financially by Apple, (AAPL, Tech30) Dell (DVMT) and other U.S. and Japanese firms.

But regulatory reviews and a challenge from U.S. data storage firm Western Digital could delay the sale beyond the critical March deadline.

The collapse of Toshiba’s U.S. nuclear unit Westinghouse, which filed for bankruptcy earlier this year, cost the storied Japanese company some $6.4 billion.

The loss forced Toshiba to report a negative net worth for the last fiscal year.

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