U.S. UNIT FILES FOR BANK­RUPTCY

Move will al­low Westinghouse to rene­go­ti­ate or break con­struc­tion con­tracts

New Straits Times - - Business -

TOKYO

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

REUTERS PIC

The Vog­tle Unit 3 and 4 site, near Way­nes­boro, Ge­or­gia, which is be­ing con­structed by Westinghouse.

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