Bankruptcy protection for nuclear US giant
TOSHIBA’S US nuclear unit Westinghouse has filed for Chapter 11 protection from creditors, as its Japanese parent seeks to limit losses that threaten its future.
A bankruptcy filing yesterday 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.
Westinghouse is among a handful of nuclear vendors vying for South Africa’s controversial nuclear build programme, which is expected to be South Africa’s largest procurement programme, even though its exact costs are not known yet.
When Eskom wanted to double electricity capacity by 2025, Westinghouse and Areva of France were shortlisted for the procurement of the socalled Nuclear-1, a turn-key project. Eskom shelved the project in 2008, citing financial constraints.
The government at the time said it would pursue a fleet approach instead of a turnkey project. However, the government has yet to commence with the procurement of the nuclear programme.
For Toshiba, the aim is to mitigate soaring liabilities stemming from guarantees it provided. Toshiba said Westinghouse-related liabilities totalled $9.8 billion (R126.12bn) as of December, more than an earlier estimate of around $6.3bn.
As a result, the Japanese industrial conglomerate said it may book a net loss of ¥1 trillion (R116bn) for the year ending in March, up from an initial forecast of a ¥390bn loss.
The move is expected to trigger complex negotiations between the Japanese conglomerate, its US unit and creditors, and could embroil the US and Japanese governments, given the scale of the collapse and US government loan guarantees for new reactors.
Westinghouse, which made the filing at the US Bankruptcy Court for the Southern District of New York, said it has secured $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 $200m of the financing for Westinghouse, adding that the troubled unit would be removed from its consolidated books at the end of the month.