As expected troubled American nuclear company Westnghouse has filed for Chapter 11 bankruptcy protection as its owner Toshiba, which is wrestling with a $6.3bn writedown on its US nuclear business, tries to extricate itself from a problematic US nuclear industry that is pushing it towards the brink of financial collapse.
The filing, on 29 March, followed talks between Toshiba, its lenders and the creditors of Westinghouse. Reportedly, Toshiba would like to sell off Westinghouse before the end of its fiscal year on March 31. Apart from its Westinghouse problems Toshiba is negotiating the rising risk of share delisting at home, owing to its having twice delayed the release of its audited results for the fiscal third quarter of last year.
The demise of Westinghouse has been caused by spiralling cost overruns at nuclear power plant builds in South Carolina and Georgia, which are now estimated to cost $11bn more than originally budgeted. Westinghouse says that it has obtained $800m in financing from a third-party lender to support the operation of its nuclear power plants during the restructuring phase. “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 José Emeterio Gutiérrez, Westnghouse interim chief executive.
Toshiba shares have risen slightly in the last few days but have fallen 53% since mid-December when the scale of Westinghouse’s problems was first disclosed.
According to business analysts the planned bankruptcy and sale of Westinghouse, which owns reactor technologies used in nuclear-powered US aircraft carriers and submarines, reveals complications that could extend beyond Toshiba to government relations between Japan and the USA.