China says Westinghouse bankruptcy won't have big impact on nuclear plans

TOKYO-Westinghouse Electric Co., a unit of Japanese conglomerate Toshiba Corp., filed for bankruptcy on Wednesday, hit by billions of dollars of cost overruns at four nuclear reactors under construction in the U.S. Southeast.

A storied name in nuclear power, Westinghouse incurred billions of dollars of cost overruns building the nuclear reactors in Georgia and SC, a financial disaster that threatens Toshiba's viability.

Its parent company, the Tokyo-based Toshiba Corp., reported that Westinghouse had amassed $9.8 billion in liabilities by the end of past year.

The company obtained $800 million in third-party financing to help protect its core businesses during its reorganization.

Westinghouse added that its operations in the Asia and Europe, Middle East and Africa (EMEA) regions are not impacted by the Chapter 11 filings.

Toshiba at the time said it would sell a stake of less than 20 percent in its flash memory business to ensure its liabilities do not exceed its assets in the current business year.

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.

Toshiba will close the first round of bids for its chip business on Wednesday, several sources with knowledge of the issue said, declining to be identified as they are not authorized to speak on the matter.

"We apologies to all stakeholders, including shareholders, for causing this trouble and worry over our nuclear business", Tsunakawa told the shareholders' gathering.

The Westinghouse filing is unlikely to prevent Toshiba from ending fiscal 2016 in negative net worth.

They intend to withdraw from the U.S. nuclear business entirely. "While we are working with Westinghouse to maintain momentum at the site, we are also now conducting a full-scale schedule and cost-to-complete assessment to determine what impact Westinghouse's bankruptcy will have on the project".

Westinghouse's problems have raised fears for Britain's new nuclear ambitions as Toshiba is a key player behind plans for a new power station at Moorside in Cumbria.

Toshiba said in a recent financial presentation it intends to "reduce risk at eight plants now in progress by thoroughly implementing comprehensive cost reduction measures".

Westinghouse has nuclear projects in varying degrees of development in India, the United Kingdom and China.

Westinghouse's bankruptcy, the latest financial debacle to buffet corporate Japan, comes on top of a separate 2015 accounting scandal for Toshiba.

One investor pointed out the firm described both the chip and nuclear businesses as core units of Toshiba just a year ago.

"The company is seeking to undertake a strategic restructuring as a result of certain financial and construction challenges", said Westinghouse, which is based outside Pittsburgh, Pennsylvania.

  • Anthony Vega