Toshiba's Westinghouse nuclear division plunges into bankruptcy
- Author: Zachary Reyes Apr 08, 2017,
Apr 08, 2017, 13:52
Westinghouse Electric Co., the USA nuclear unit of Japan's Toshiba Corp., filed for bankruptcy protection Wednesday, calling into question the future of a number of billion-dollar nuclear projects under construction, including two in the U.S.
Regulators in Georgia and SC approved the construction of Westinghouse's AP1000 reactors in 2009, a sign of a nuclear renewal taking hold in the United States.
Following multibillion-dollar losses, Toshiba's American nuclear unit Westinghouse filed for U.S. bankruptcy protection on Wednesday.
Toshiba is wrestling with a US$6.3bn writedown on its U.S. nuclear business, with Westinghouse having suffered huge cost overruns at two USA projects in Georgia and SC, which are now estimated to cost US$11bn more than originally budgeted.
Toshiba (TOSYY) on Thursday won approval from angry shareholders to separate its flash memory business in preparation for a sale that the company hopes will offset massive liabilities from the bankruptcy of its Westinghouse nuclear energy unit.
Toshiba warned Wednesday that its full-year loss might balloon to as much as $9.1 billion, up from a previous estimate of $3.5 billion.
Westinghouse announced a "strategic restructuring" today (29 March 2017) and has secured $800 million in debtor-in-possession financing to fund operations.
Toshiba, whose shares have crashed as the nuclear problems surfaced, said it would guarantee up to $200 million of the financing for Westinghouse.
Toshiba executives are expected to hold a news conference to give more details.
Toshiba has been selling other assets including its prized chip unit - the world's second-biggest NAND chip producer which it values at least $13 billion - to bolster its balance sheet. But delays were inevitable: the reactor company claims that safety regulations passed to prevent terrorist attacks against targets like nuclear reactors forced redesign and relicensing of the two power plants, which "created additional, unanticipated engineering challenges that resulted in increased costs and delays on the US AP1000 Projects".
He added that Hinkley Point C, the new nuclear power station being built in Somerset by France's EDF, had only been able to go ahead with support from the UK, French and Chinese governments. Westinghouse has been hurt by cost overruns at two nuclear plants it is building in the United States, as well as challenging economics for new plants in organized power markets.
The U.S. government has granted loan guarantees totaling $8.3 billion to the utilities commissioning the Georgia project.
Toshiba media representatives could not immediately be reached for comment after business hours.
Toshiba has said it will no longer take on new reactor construction projects and will focus on maintaining the reactors it already has.
Both South Carolina and Georgia allow utilities to charge ratepayers for power plant construction still in progress. "They intend to withdraw from the USA nuclear business entirely".