Toshiba's Westinghouse files for bankruptcy as charges jump

Cornelia Mascio
Aprile 11, 2017

Toshiba (Swiss: TOSH.SW - news) 's loss-hit USA nuclear (Other OTC: UCLE - news) unit Westinghouse Electric Company has filed for bankruptcy protection, the companies said Wednesday, as the troubled division wrestles with huge losses and accounting fraud claims.

US nuclear giant Westinghouse's bankruptcy filing is unlikely to have an impact on the commercial implementation of the Indo-US civil nuclear deal, but India needs to be extra cautious in its negotiations for setting up nuclear power plants, a top US expert said today.

In a statement, Toshiba said Westinghouse's application for bankruptcy meant the supply of reactors from the U.S. to Moorside was now "uncertain".

Westinghouse, a subsidiary of Japanese conglomerate Toshiba, says it has secured $800 million in financing as it goes through a "strategic restructuring". SO, -0.03% and Scana Corp.

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. But Toshiba could contest that.

Toshiba said in a statement that it filed the Chapter 11 petition in the U.S. Bankruptcy Court of NY.

The bankruptcy means the future of Westinghouse's under-construction plants in Georgia and SC is "uncertain", Lisa Donahue, restructuring chief of consultancy AlixPartners and chief transition and development officer of Westinghouse, said in a court filing. US regulators and countries around the world were then also evaluating other proposals for nuclear projects.

Toshiba acquired Westinghouse in 2006, making nuclear power an important part of its business strategy. The Pittsburgh-based Westinghouse unit is under construction.

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.

Scana Corp, which is the majority owner of the V.C. Summer nuclear project in SC, did not immediately respond to a request for comment.

The Fukushima nuclear accident in Japan also slowed worldwide nuclear development, causing delays at Westinghouse's projects in Georgia and SC and ballooning safety costs at existing nuclear plants. The Japanese firm said in a statement Wednesday that Westinghouse will no longer be under its control and will be deconsolidated from its financial results. Toshiba believes the unit will be valued at least 2 trillion yen ($18 billion), he added.

The Japanese government confirmed on Wednesday that it was aware of Toshiba's plans.

For employees at Westinghouse, the company insists it's business as usual with no lay-offs or pay reductions.

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