TOKYO - Shares in Japan's Toshiba sank 10 percent in morning trade on Friday, after rating agency S&P Global said it could slash the conglomerate's rating if financial support from lenders includes any form of debt restructuring.
The rating agency said in a note that such a move would be seen as "selective default".
Toshiba, rated CCC+ by S&P, is already on credit watch with negative implications, after downgrades in December and January.
"Given Toshiba's already very fragile financial standing, whether the company can receive continuous financial support from its creditor banks, including liquidity support, is a key factor in our credit analysis," S&P said in a statement issued on Friday.
"Even in the event banks continue to provide financial support for the company, if it includes any form of debt restructuring we define as selective default, we will lower the ratings by multiple notches."
At around 0315 GMT, Toshiba shares were down 9.9 percent, underperforming a broader market down 0.5 percent.
The TVs-to-nuclear conglomerate is scrambling for cash tostay in business after a multibillion dollar hit to the value of its nuclear business.