Huge nuclear cost overruns push Toshiba's Westinghouse into bankruptcy
By Tom Hals, Makiko Yamazaki and Tim Kelly
WILMINGTON, DEL./TOKYO (Reuters) - Westinghouse Electric Co, a unit of Japanese conglomerate Toshiba Corp, filed for bankruptcy on Wednesday, hit by billions of dollars of cost overruns at four nuclear reactors under construction in the U.S. Southeast.
The bankruptcy casts doubt on the future of the first new U.S. nuclear power plants in three decades, which were scheduled to begin producing power as soon as this week, but are now years behind schedule.
The four reactors are part of two projects known as V.C. Summer in South Carolina, which is majority owned by SCANA Corp, and Vogtle in Georgia, which is owned by a group of utilities led by Southern Co.
Costs for the projects have soared due to increased safety demands by U.S. regulators, and also due to significantly higher-than-anticipated costs for labor, equipment and components.
Pittsburgh-based Westinghouse said it hopes to use bankruptcy to isolate and reorganize around its "very profitable" nuclear fuel and power plant servicing businesses from its money-losing construction operation.
Westinghouse said in a court filing it has secured $800 million in financing from Apollo Investment Corp, an affiliate of Apollo Global Management, to fund its core businesses during its reorganization.
For Toshiba, the filing will help keep the crisis-hit parent company afloat as it lines up buyers for its memory chip business, which could fetch $2 billion. Toshiba said Westinghouse-related liabilities totalled $9.8 billion as of December.
Toshiba said it would guarantee up to $200 million of the financing for Westinghouse. Toshiba shares closed up 2.2 percent but have lost half their value since the nuclear problems surfaced late last year. Continued...