Westinghouse Electric is filing for bankruptcy
- Author: Zachary Reyes Mar 30, 2017,
Mar 30, 2017, 1:25
USA nuclear developer Westinghouse Electric Co intends to search for bankruptcy protection from creditors on Tuesday as it fights to stop losses that have caused its Japanese parent Toshiba Corp into crisis, people familiar with Toshiba's thinking stated.
For Toshiba, the aim is to mitigate liabilities stemming from guarantees it provided backing the contractor's work. It has obtained $800 million in debtor-in-possession (DIP) financing from a third-party lender to help fund and protect its core businesses during its reorganization.
Toshiba said through a prepared statement it was guaranteeing as much as $200 million of Westinghouse's financing and added that the unit would be taken out of its consolidated books at the end of March. However, the unit representative said that the Westinghouse's bankruptcy would not affect its operation in Europe, the Middle East, Asia, and Africa.
Toshiba said: " The Chapter 11 filings have made planned supply of the AP1000 (nuclear power plant) for the United Kingdom project uncertain, and we have therefore recorded an impairment loss covering the cost of the NuGen project. A consortium led by South Korea's SK Hynix Inc has reportedly offered to pay more than $9 billion for a majority stake in Toshiba Corp's memory chip business.
The U.S. government granted loan guarantees totaling $8.3 billion to the utilities commissioning the Georgia project.
Toshiba has previously warned it was on track to report a net loss of 390 billion yen ($3.5 billion, 3.2 billion euros) in the fiscal year to March, as it faced a writedown topping 700 billion yen at Westinghouse.
A Toshiba spokeswoman said the company could not comment on issues discussed at its board meetings.
A separate source said that Foxconn, the world's largest contract electronics manufacturer, is expected to place an offer which is likely to be the highest bid.
George Westinghouse an American inventor and engineer founded the company in 1886.
"Toshiba is scrambling to find a buyer to take the Westinghouse anvil from around its neck".
"Toshiba concluded that a Chapter 11 filing was essential to rebuild Westinghouse", Toshiba CEO Satoshi Tsunakawa said at a news briefing in Tokyo.
The Summer units are being built for Scana Corporation's subsidiary South Carolina Electricity and Gas (SCE&G) and co-owner Santee Cooper, while the Vogtle units are for Georgia Power, a subsidiary of Southern Company. In November the Japanese government doubled its 11 trillion yen estimate to 21.5 trillion yen.
A storied name in nuclear power, Westinghouse incurred billions of dollars of cost overruns building the nuclear reactors in Georgia and SC, a financial disaster that threatens Toshiba's viability. It could also embroil the USA and Japanese governments, given the scale of the collapse and the $8.3 billion in US government loan guarantees that were provided to help finance the reactors.
Toshiba TOSYY, -1.11% 6502, +1.01% said last month it would take a write-down of more than $6 billion due to the US cost overruns. However, the problem appeared since the USA government failed to adopt the legislation for curbing the carbon emission.
In the UK, Westinghouse owns the Springfields nuclear fuel making site at Salwick and, as part of Toshiba, is alongside with France's Engie, behind the huge Moorside nuclear power plant project set to see three new reactors near Sellafield to secure Britain's energy future.