This Is Why Toshiba Shares Are Tanking Again on Friday

S&P Global said in a report on Friday it could cut its rating of Toshiba credit by several notches should the Japanese firm receive financial support that includes debt restructuring, sending Toshiba stock down 9%.

S&P rates Toshiba credit as junk, at CCC+, following downgrades in December and January, after the conglomerate flagged a multi-billion dollar writedown in its nuclear power business. The credit-rating firm expects banks to help Toshiba, including by extending deadlines for loan repayments.

Any further downgrade would prompt banks to charge Toshiba (tosbf) even higher rates for credit, at a time when the conglomerate is dealing with the crippling writedown while still working to recover from a financial scandal in 2015.

“If any financial support includes debt-to-equity swaps or changes in loan conditions, we would consider that as selective default,” S&P Global analyst Hiroki Shibata said in a telephone conference later on Friday. “In that event, we might cut its rating by several notches.”

Shibata drew comparison with Sharp. In 2015, S&P cut its rating of Sharp’s credit further into junk about six months after the Japanese display maker sealed a 200 billion yen ($ 1.76 billion) debt-to-equity swap deal with Mizuho Bank and Bank of Tokyo Mitsubishi UFJ in 2015.

On Thursday, Sumitomo Mitsui Financial Group’s banking unit said it would provide Toshiba with as much support as possible. Toshiba’s other main lender is Mizuho Financial Group.

A day earlier, Toshiba executives asked creditors for an extension of a waiver for a loan covenant violation until the end of next month, people familiar with the matter told Reuters.

S&P’s Shibata on Friday also said the credit-rating firm was closely watching Toshiba’s likely sale of its chip business.

Toshiba initially planned to sell less than 20% of its NAND flash memory unit, but is now considering selling most or all the business some time after March 31, a person with knowledge of the matter told Reuters.

The chip business is cyclical and capital intensive but currently generates stable profit, so its sale could essentially be negative for Toshiba, Shibata said.

Toshiba was not immediately available for comment.

Separately, Toshiba said in a stock exchange filing on Thursday that it would buy 3% of U.S. nuclear power subsidiary Westinghouse Electric from IHI for $ 157 million, after the Japanese infrastructure firm exercised an option to sell.

The multi-billion writedown in Toshiba’s nuclear business stemmed from a unit owned by Westinghouse.