Toshiba nuclear unit Westinghouse files for bankruptcy protection
- Author: Zachary Reyes Apr 10, 2017,
Apr 10, 2017, 21:41
The sale of Toshiba's prized asset is crucial for the Japanese conglomerate to turn around its fortune, after it was forced to delay formal earnings reporting over massive losses at its U.S. nuclear unit, Westinghouse, and whistleblower claims about accounting misconduct by senior executives at the unit.
Toshiba Corp's troubled USA nuclear unit Westinghouse filed for Chapter 11 protection from creditors on Wednesday, as its parent seeks to limit losses that have plunged it into crisis.
The filing comes as the company's corporate parent, Toshiba of Japan, scrambles to stanch huge losses stemming from Westinghouse's troubled nuclear construction projects in the American South.
Faced with ballooning losses, Toshiba had been considering a way to distance itself from the fallout from the debacle at Westinghouse, which it bought in 2006 to expand its nuclear power business overseas.
"Georgia Power and the project's other Georgia-based co-owners have been preparing for the possibility of a Westinghouse bankruptcy filing", said Jacob Hawkins, spokesperson for Georgia Power.
Toshiba has said it will take a write-down on more than $6 billion over the Westinghouse cost overruns.
Westinghouse said it secured financing of $800 million to fund as well as protect core businesses during the reorganization.
Toshiba, whose shares have crashed as the nuclear problems surfaced, said it would guarantee up to $200 million of the financing for Westinghouse.
It added: "Westinghouse's operations in its Asia and Europe, the Middle East and Africa (EMEA) Regions are not impacted by the Chapter 11 filings".
Japanese financial regulators have given the company until April 11 to publish results for the October to December quarter, which were originally due in mid-February.
Two years after the acquisition, Westinghouse won orders for 4 nuclear reactors in the United States, and Toshiba executives felt they were off to a good start. Toshiba says acquiring Westinghouse has led to billions of dollars in losses. US regulators and countries around the world were then also evaluating other proposals for nuclear projects. "This agreement with Westinghouse allows progress to continue to be made on-site while we evaluate the most prudent path to take going forward", said SCANA Chairman and CEO, Kevin Marsh.
According to media reports, the potential buyers for the memory chip unit include U.S. firms Western Digital and Micron Technology as well as South Korea's SK Hynix.
One said that about 10 potential bidders had shown interest, including Western Digital Corp WDC.O which operates a Japanese chip plant with Toshiba, rival Micron Technology Inc, South Korean chipmaker SK Hynix Inc and financial investors like Bain Capital.
"So both Westinghouse and a new potential customer like NPCIL in India will have to be very careful in their financial negotiations in order to ensure that Westinghouse does not back out of its legal and financial obligations if it hits a road bump as it has in its four nuclear power plants under construction in the USA and China, with all four plants having exceeded their original cost and schedule commitments", Sazawal told PTI.
Toshiba has a 60% stake in NuGen, a joint venture with France's Engie, which has the contract to build a new nuclear power plant in Cumbria in the UK.