Exclusive: Westinghouse's clients gear up for bankruptcy fight - sources

Thu Mar 23, 2017 3:18am EDT
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By Jessica DiNapoli

(Reuters) - The U.S. utilities that are clients of Toshiba Corp's (6502.T: Quote) nuclear power plant construction subsidiary, Westinghouse Electric Co LLC, have hired advisers to prepare for its potential bankruptcy, according to people familiar with the matter.

The move comes as Toshiba sees Westinghouse's bankruptcy as increasingly likely. The Japanese conglomerate has hired restructuring consulting firm Berkeley Research Group LLC and law firm Skadden, Arps, Slate, Meagher & Flom LLP to help defend it against bankruptcy claims, the people said on Wednesday.

Scana Corp (SCG.N: Quote) and Southern Co (SO.N: Quote), the power utilities which hired Westinghouse to build the first nuclear power plants in the United States in more than 30 years, have also hired restructuring advisers, the people said.

This is because, in a potential Westinghouse bankruptcy, Scana and Southern Co would be among Westinghouse's largest creditors, owed the cost overruns on the projects, which tally in the billions of dollars, one of the people added. The utilities are hoping to recover these costs in a bankruptcy process for Westinghouse, according to the sources.

Scana has hired restructuring experts from advisory firm Ducera Partners LLC, while Southern Co is working with investment bank Rothschild & Co, the people said. Scana owns the South Carolina plant under construction, while Georgia Power, a subsidiary of Southern Co, will own plants in Georgia.

"Whether or not Westinghouse files for Chapter 11 (bankruptcy) is ultimately a decision for its board, and must take into account the various interests of all of its stakeholders, including Toshiba and its creditors," Toshiba said in a prepared statement. "It is not appropriate for Toshiba to comment prematurely."

The conglomerate has also said bankruptcy is one of several options for Westinghouse, which it acquired for $5.4 billion about 10 years ago.

The sources asked not to be identified because preparations for a potential Westinghouse bankruptcy are confidential.   Continued...

FILE PHOTO - Visitors look at a nuclear power plant station model by American company Westinghouse at the World Nuclear Exhibition 2014, the trade fair event for the global nuclear energy sector, in Le Bourget, near Paris October 14, 2014. REUTERS/Benoit Tessier/File Photo