For "zombie" Fukushima operator, fresh financing masks long-term woes

Sun Oct 6, 2013 7:53pm EDT
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By Mari Saito

TOKYO (Reuters) - Its stock price has nearly trebled this year, its near-term debt trades at par, banks have extended credit, and an enterprise value of $83 billion - a rough guide to how much it could cost to buy - makes it Asia's biggest listed electricity utility.

Yet Tokyo Electric Power (9501.T: Quote), or Tepco, has lost $27 billion since the 2011 disaster at its Fukushima Daiichi nuclear plant, and faces massive liabilities as it decommissions the facility, compensates tens of thousands of residents forced to evacuate, and pays for decontamination of an area nearly the size of Connecticut.

Creditors, led by Japan's top banks, have agreed to provide Tepco with $5.9 billion - rolling over existing loans and putting in new financing [ID:nT9N0GD01Q] - and the company has applied to restart its 7-reactor Kashiwazaki Kariwa facility, the world's biggest nuclear plant, saying a restart would save it $1 billion a month in fuel costs.

All of which has prompted Tepco, which supplies electricity to 29 million homes and businesses in and around Tokyo, to say it could make a profit this financial year.

"It's all kabuki," said Tom O'Sullivan, founder of independent energy consultancy Mathyos Japan, using a Japanese term to portray political posturing. "Tepco still faces significant problems."

"You have the trade minister ... saying the utility is fine. You have Tepco's president ... applying for restarts, and you have banks falling in line to roll over loans. It's very much an orchestrated presentation."

Tepco is expected to lose 21 billion yen ($216 million) at an operating level in the year to end-March, according to Thomson Reuters StarMine SmartEstimates, which places greater emphasis on top-rated analysts' forecasts. But, at a net level, Tepco - which was nationalized last year - is seen posting a 409 billion yen profit, boosted by booking as one-off gains funds provided by a state-backed entity for compensating evacuees.

"The timing of the Kashiwazaki Kariwa restart is unclear, so even if we are not able to restart it in fiscal 2013, we will take all possible measures, including emergency financial measures, that would defer costs, allowing us to make a profit," Tepco said in response to Reuters queries for this article.   Continued...

A man walks past Tokyo Electric Power Co (TEPCO)'s logo at the company headquarters in Tokyo in this July 30, 2012 file photo. REUTERS/Yuriko Nakao/Files