Toshiba says not aware Westinghouse considering Chapter 11 filing
By Makiko Yamazaki
TOKYO (Reuters) - Toshiba Corp (6502.T: Quote), responding to media reports, said on Friday it was not aware that its U.S. nuclear unit Westinghouse was considering filing for Chapter 11 protection from creditors - an option analysts say could jeopardize the entire group.
The Nikkei business daily reported Toshiba was now looking at a potential Chapter 11 filing as one of several options for Pittsburgh-based Westinghouse, as it grapples with cost overruns at two U.S. projects that are set to result in a $6.3 billion writedown.
In theory, such a drastic step could help draw a line under problems in its nuclear business.
But analysts and sources with knowledge of the matter say that even under a Chapter 11 filing, Toshiba could still be on the hook for up to $7 billion in potential liabilities as it has guaranteed Westinghouse's contractual commitments - an arrangement typical for the nuclear industry.
One source familiar with the matter told Reuters there had been discussions within Toshiba on the issue, but there was also a lot of resistance. The source could not be identified because he was not authorized to speak to the media.
A spokesman for the TVs-to-construction conglomerate said he was unsure how any U.S. bankruptcy filing would affect its Westinghouse contractual commitments .
The ill-fated purchase of nuclear construction plant firm CB&I Stone & Webster in late 2015 has plunged Toshiba into crisis, forcing it offer up a majority stake in its prized memory chips business for sale.
It has been forced to recognize huge cost overruns at two projects to build the first nuclear reactors in the United States in 30 years, stemming from design changes such as reinforcing the plants to withstand aircraft crashes. Continued...