U.S. UNIT FILES FOR BANKRUPTCY
Move will allow Westinghouse to renegotiate or break construction contracts
TOSHIBA Corp’s United States nuclear unit Westinghouse has filed for Chapter 11 protection from creditors yesterday, as its Japanese parent seeks to limit losses that threaten its future.
A bankruptcy filing will allow Westinghouse, whose nuclear plant projects have been dogged by delays and cost overruns, to renegotiate or break its construction contracts, although the utilities that own the projects would likely seek damages.
For Toshiba, the aim is to mitigate soaring liabilities stemming from guarantees it provided. Toshiba said Westinghouse-related liabilities totalled US$9.8 billion (RM43.3 billion) as of December, more than an earlier estimate of around US$6.3 billion.
As a result, the Japanese industrial conglomerate said it may book a net loss of one trillion yen (RM39.7 billion) for the year ending in March, up from an initial forecast of a 390 billion yen loss.
The move is expected to trigger complex negotiations between the Japanese conglomerate, its American unit and creditors, and could embroil the United States and Japanese governments, given the scale of the collapse and US government loan guarantees for new reactors.
Westinghouse said it secured US$800 million in financing to fund and protect its core businesses during its reorganisation.
Toshiba, whose shares have crashed as Westinghouse’s problems surfaced, said it would guarantee up to US$200 million of the financing for Westinghouse, adding that the troubled unit would be removed from its consolidated books at the end of the month.
Westinghouse has nuclear projects in varying degrees of development in India, the United Kingdom and China, and the company said its operations in Asia, Europe, the Middle East and Africa would not be impacted by the filing.
“We are focused on developing a plan of reorganisation to emerge from Chapter 11 as a stronger company while continuing to be a global nuclear technology leader,” said Westinghouse interim president and chief executive officer Jos Emeterio Gutirrez. Reuters
The Vogtle Unit 3 and 4 site, near Waynesboro, Georgia, which is being constructed by Westinghouse.