TOKYO (Reuters) - Toshiba Corp (6502.T) said it will sell a minority stake in its memory chip business as it urgently seeks funds to offset an imminent multi-billion dollar writedown, adding that its overseas nuclear division - the cause of its woes - was now under review.

The drastic measures are set to be just some of the tough choices the Japanese conglomerate will have to take as proceeds from the sale are likely to only cover part of a charge that domestic media has put at $6 billion.

Still battered by a 2015 accounting scandal, Toshiba was plunged back into crisis when it emerged late last year that it had to account for huge cost overruns at a U.S. power plant construction business recently acquired by its Westinghouse division.

Describing the nuclear division as no longer a central business focus for the firm, Chief Executive Satoshi Tsunakawa said Toshiba will review Westinghouse's role in new projects and whether it will embark on new power plant construction. The division will also now fall under direct CEO supervision.

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Tsunakawa added Toshiba was looking to sell less than 20 percent of its memory chip business - the world's biggest NAND flash memory producer after Samsung Electronics (005930.KS) - which comprises the bulk of the conglomerate's operating profit.

The firm is rushing to complete the sale by the end of the financial year in March as failure to do so will likely mean that shareholder equity - just $3 billion in the wake of the accounting scandal - would be wiped out by the charge.

Sources have said Toshiba aims to raise more than 200 billion yen ($1.7 billion) from the sale and potential investors include private equity firms, business partner Western Digital Corp (WDC.O) and the government-backed Development Bank of Japan.

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It is also selling other assets although it ruled out the sales of any of its infrastructure businesses - which include water treatment, railway and elevator firms.

"We've been raising funds through sales of stock holdings, real estate and other assets," Tsunakawa told a news conference without disclosing the amount, adding that various measures were being considered to boost the firm's capital base by March.

Toshiba also said it may eventually list the memory chip business.

Executives declined to comment on the size of the writedown, which will be announced on Feb.14 when Toshiba reports third-quarter results.

FUNDS CAUTIOUS

Mark Newman, an analyst at Sanford Bernstein in Hong Kong, said a stake sale would likely only be a short-term band-aid.

"The NAND business is the only one with value, as it makes up all of the semi-conductor profits, which comprise 75 percent of the overall company's profit. I won't be surprised if they sell another 20 percent in a few years time and then another 20 percent."

Sources have said many private equity funds, including Silver Lake and Permira, have signed non-disclosure agreements with Toshiba. But it remains to be seen how well the sale will go given the end-March deadline and caution on the part of potential investors.

"Partnering with Toshiba could be risky due to uncertainties over its nuclear business," said an official at a global private equity firm.

"Chip businesses are highly cyclical and need massive capital investment. Funds are cautious because they have had their fingers burnt with chip investments in the past," said the official, who was not authorized to speak to media and declined to be identified.

Western Digital, which operates a NAND plant in Japan with Toshiba, may seem like a natural buyer of a large stake in the chip business, but a sale before March might be difficult as it would likely invite a review by anti-trust regulators.

FOXCONN INTEREST?

Toshiba estimates the value of its memory chip business at 1-1.5 trillion yen ($9-13 billion), a person with direct knowledge of the matter has told Reuters.

The business generated sales of 845 billion yen and operating profit of 110 billion yen in the past financial year.

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Toshiba has also called on its main banks to support it and they have agreed to not call in some loans early for now even as recent downgrades of the firm's credit ratings violate some provisions in debt agreements, people with direct knowledge of the matter have said.

Business weekly Toyo Keizai reported that Taiwan's Foxconn, the world's largest contract manufacturer, is interested in either taking a stake in or buying some of Toshiba's businesses.

Foxconn founder Terry Gou wants to build up the company's advanced big-screen display business and the integration of chips, camera, storage, streaming will be key, said one person familiar with the company, adding he would "not be surprised" to see Foxconn start talks with industry players including Toshiba.

A representative for Foxconn, formally known as Hon Hai Precision Industry Co (2317.TW), had no immediate comment.

(Reporting by Makiko Yamazaki and Taiga Uranaka; Additional reporting by Umesh Desai in Hong Kong, Junko Fujita and Taro Fuse in Tokyo, JR Wu in Taipei; Editing by Edwina Gibbs)