By Makiko Yamazaki
TOKYO (Reuters) - Japan's Toshiba Corp plans to more than halve its capital base, a move that may enable it to resume paying dividends quicker and get a fresh capital injection as it aims to recover from a $1.3 billion accounting scandal last year.
Toshiba will cut its capital to 200 billion yen ($1.8 billion) from 439.9 billion yen to plug a deficit in its earnings reserves on its balance sheet after posting huge losses, the company said on Monday.
A capital reduction is a common step for Japanese companies with a history of deep losses that aim to return to profits and begin paying dividends. Mitsubishi Motors undertook a capital reduction in 2013.
The step allows Toshiba to set aside the amount of the capital reduced as an earnings reserve on the balance sheet to fund future dividends. A dividend resumption would be crucial when the company decides to issue new shares to boost its capital base.
"Our shareholders' equity is thin as we all know," Chief Financial Officer Masayoshi Hirata told a press briefing. "We will first improve our management efficiency, but could then consider various capital strategies."
But in a sign that straightening its books was still a work in progress, Toshiba corrected its earnings results for the year that ended in March, citing miscalculation in taxes and a change in the method of evaluating goodwill of the nuclear business.
Its operating loss came to 708.7 billion yen, compared with the 719.1 billion yen loss announced earlier this month, it said.
The correction was partly due to "a lack of enough time to check the final process of compiling financial statements," Hirata said. "We will do our best to prevent recurrences."
The capital reduction will be subject to shareholders' approval and would be effective July 31, the embattled industrial conglomerate said in a statement.