As its parent company Toshiba Corp. stepped up efforts to deal with the financial fallout from its nuclear power business, Westinghouse Electric Co. has brought in a turnaround specialist and adjusted employee benefits, including a provision that concerns layoff severance payments.
Cranberry-based Westinghouse retained Lisa Donahue as its chief transition and development officer. She and her team at AlixPartners, a New York-based corporate restructuring firm, “will be focused on critically analyzing our strategy of where, when and how we do business in order to reduce costs and drive value,” said Sarah Cassella, a Westinghouse spokesperson.
“Her expertise in financial rebuilding and operational restructuring will be invaluable to our operational changes.”
Ms. Donahue most recently worked to restructure the $9 billion debt of the Puerto Rico Electric Power Authority. The contract ended last month.
At a press conference Tuesday, following the second time Toshiba has sought a last-minute extension for the deadline to file its financial results, the Japanese company’s chief executive, Satoshi Tsunakawa, confirmed that one option for Westinghouse is to file for Chapter 11 bankruptcy protection.
Another is a sale, he said.
Mr. Tsunakawa said the company was looking at selling its majority stake in Westinghouse and making it a priority to try to get the energy giant’s battered results off its books. Toshiba also posted a presentation showing the company’s financial future without Westinghouse in 2018.
“We want to deal with this properly,” he said at a news conference after the company won approval for a second delay in reporting its earnings for October-December.
“We are working on nurturing our growth businesses to return to stable growth by fiscal years 2018 and 2019,” Mr. Tsunakwa added, repeating apologies to stakeholders.
Toshiba is expecting a group net loss of $4.3 billion for April-December of last year, including a $6.2 billion hit from its embattled nuclear business. Its chairman has resigned to take responsibility for the company’s troubles.
Toshiba acquired Westinghouse in 2006 with much fanfare, making nuclear power an important part of its business strategy.
But that was before the March 2011 Fukushima nuclear disaster, which has boosted the costs of the business because of growing safety concerns and regulations, and a souring of sentiment toward nuclear power in some countries, such as Germany.
Westinghouse’s purchase in 2015 of CB&I Stone & Webster, a nuclear construction and services business, was meant to win more business in decontamination, decommissioning and plant projects, but it just amplified those problems.
Auditors questioned Toshiba’s latest reporting on the acquisition of CB&I Stone & Webster after a whistleblower, an employee at Westinghouse, wrote a letter to the Westinghouse president.
Toshiba said it was further investigating the acquisition, since a preliminary probe added to suspicions that some of the whistleblower’s allegations of wrongdoing might be true.
The parent company’s reputation has also been tarnished in recent years by a scandal over the doctoring of accounting books to meet unrealistic profit targets.
The company has said it will no longer take on new reactor construction projects and will focus on maintaining the reactors it already has. But it is also involved in the decommissioning of the Fukushima Dai-ichi nuclear plant, which suffered multiple meltdowns after the March 2011 tsunami.
Toshiba faces the risk of being delisted in Tokyo. It has already sold part of its chip business, and its president has said it is thinking about selling all of it to mend its finances. It sold its household appliance unit to Midea of China, which is maintaining the Toshiba brand name.
It also is selling its entire 65 percent stake in a medical equipment leasing company to Japanese camera maker Canon Inc.
Anya Litvak: firstname.lastname@example.org or 412-263-1455. The Associated Press contributed.
First Published March 14, 2017 7:23 AM