Toshiba’s decision to sell some $5 billion in stock to avoid being delisted from the Tokyo Stock Exchange doesn’t change much for Westinghouse Electric Co., which Toshiba owns but wishes it didn’t.
The Japanese conglomerate has been trying to sell Westinghouse since the Cranberry-based nuclear firm filed for bankruptcy in March.
This week, Toshiba said it wants to get rid of all of its Westinghouse ties by the end of March. That means finding someone interested in buying Westinghouse and assuming Toshiba’s claims against Westinghouse — the money it says it is owed by the U.S. firm now caught up in bankruptcy court.
Toshiba also said it wants to pay the nearly $6 billion that it promised to U.S. utilities involved in building Westinghouse AP1000 plants as soon as possible. It believes that paying that obligation in full will give it the right to seek reimbursement for that sum from Westinghouse — another asset Toshiba would seek to sell to a third party.
During the summer, Toshiba negotiated with Southern Co. — the owner of the Vogtle project in Georgia that is the only new nuclear construction moving forward in the U.S. following Westinghouse’s bankruptcy — to pay it $3.68 billion in installments through 2021.
The Japanese company also made a deal this summer with South Carolina utilities SCE&G and Santee Cooper to pay them $2.17 billion through September 2022. The two utilities called off work on two Westinghouse nuclear power plants in July.
But Toshiba, which bought Westinghouse in 2006 for a whopping $5.4 billion, wants to be done with all things Westinghouse as soon as possible.
The Japanese company “has been spending immense internal resources in connection with Westinghouse’s rehabilitation proceedings,” Toshiba said in a statement earlier this week. It would rather redirect those resources to businesses it intends to keep and grow, it said.
Westinghouse’s financial troubles and its parent company’s accounting scandals have brought Toshiba to its knees over the past year.
The Japanese firm has been in talks to sell the majority of its most profitable arm — the memory chip business — to remain solvent. But the deal would put a huge amount of cash on Toshiba’s books and along with it a tax burden which Toshiba wants to offset by writing down its Westinghouse losses.
That’s why Toshiba is eager to wash its hands of Westinghouse during the same fiscal year as it wraps up its memory sale — before the end of March.
Reuters reported in September that several private equity groups, including Blackstone Group, Apollo Global Management, and Cerberus Capital Management, are weighing bids. Neither Toshiba nor Westinghouse has confirmed it.
Any sale of Westinghouse will have to go through the bankruptcy court, as will all claims that Toshiba has or plans to make against the U.S. nuclear firm that employs 4,000 in the Pittsburgh area.
Westinghouse’s CEO Jose Emeterio Gutierrez has said he expects the bankruptcy to wrap up early next year.
“By the end of March, we at Toshiba will be aggressively supporting and cooperating to make sure that they can conclude their filing,” Toshiba’s executive vice president, Masayoshi Hirata, said during a call with analysts earlier this month.
Westinghouse’s bankruptcy is a huge endeavor with investigations still pending and claims still being filed, including a $4.7 million claim from the Nuclear Regulatory Commission last week.
The federal regulatory body that oversees the nuclear industry in the U.S. disclosed that it is currently conducting 13 investigations into Westinghouse’s conduct before the bankruptcy, with 11 of them looking into whether Westinghouse penalized employees for “raising a nuclear safety concern.”
The NRC filed the claim estimating the upper limit that Westinghouse would have to pay if all 13 investigations result in maximum civil penalties. The agency stressed that no conclusions have been reached.
Anya Litvak: alitvak@post-gazette.com or 412-263-1455.
First Published: November 22, 2017, 11:30 a.m.