Toshiba’s US atomic unit files for bankruptcy protection

CRANBERRY TOWNSHIP - Agence France-Presse

REUTERS photo

Toshiba’s loss-hit U.S. nuclear unit Westinghouse Electric Company has filed for bankruptcy protection, the companies said on March 29, as the troubled division wrestles with huge losses and accounting fraud claims.

The Japanese conglomerate’s board approved the Chapter 11 filing in a US court in New York, a step that temporarily shelters struggling firms as they try to restructure their affairs and debts.

Westinghouse technology is at the core of about half of the world’s nuclear reactors.

“Westinghouse Electric.... and certain of its subsidiaries and affiliates, today filed voluntary petitions under Chapter 11 of the US Bankruptcy Code,” the US firm said in a statement.

“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.

Toshiba has previously warned it was facing a write-down topping 700 billion yen ($6.3 billion) at Westinghouse.

The Japanese conglomerate’s shares have lost more than half their market value since late December when Toshiba warned of a flood of red ink at Westinghouse and said it was investigating whistleblower claims of possible accounting fraud by senior executives at the division.

Japanese financial regulators have given the company until April 11 to publish results for the October-December quarter, which were originally due in mid-February.

Toshiba said on March 29 its current fiscal year through March net loss could balloon to 1.01 trillion yen, well up from an earlier projected annual loss of 390 billion yen.

“Since December 2016, WEC and Toshiba have been working to determine the scale of the possible loss, investigate the causes and to implement preventive measures and actions,” Toshiba said in a statement.

Westinghouse, which employs about 12,000 people, has had delay problems with construction of so-called AP1000 reactors in Georgia and South Carolina.

The division was once hailed by Toshiba as a future growth driver after the 2011 Fukushima nuclear accident brought new business in Japan to a screeching halt.

But the U.S. firm has been hit by the project delays and cost overruns while weakening prospects for the nuclear power industry globally have also weighed on its fortunes.