Nuclear Contractor Westinghouse Files for Chapter 11

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Toshiba Corp. projected its annual loss could more than double to a record $9.1 billion as its U.S. nuclear unit Westinghouse Electric filed for Chapter 11 bankruptcy.

The collapse of Westinghouse, once the linchpin of Toshiba's plans to diversify away from consumer electronics, caps a disastrous run for the Japanese conglomerate as project delays crippled earnings from the nuclear plant business. The company has now put its prized memory chip unit up for sale just as it was recovering from a profit-padding scandal that claimed the scalps of senior executives.

Pennsylvania-based Westinghouse, whose technology forms the basis of about half the world's atomic units, has been grappling with project setbacks in Georgia and South Carolina, which led to Toshiba's impairments.

Plant Vogtle in Georgia and VC Summer in South Carolina were both partly financed with public power agency bonds.

The Municipal Electric Authority of Georgia and the South Carolina Public Service Authority's Santee Cooper are the two public agencies with the most at stake.

Toshiba Chief Executive Officer Satoshi Tsunakawa said there is no risk of additional losses to the company from overseas nuclear projects.

"Today's filing by Westinghouse is an important step toward recovery," he said. "It is also in-line with our goal of limiting risk from overseas nuclear operations."

Westinghouse said in a statement that it obtained $800 million in debtor-in-possession financing to help fund the reorganization. The company has agreed with owners of its AP1000 reactor developments to continue the projects during an initial assessment period, and it will continue work in China, it said.

Toshiba listed as much as $10 billion debt for Westinghouse and another entity. The nuclear unit filed in U.S. Bankruptcy Court for the Southern District of New York and proposed to appoint Weil, Gotshal & Manges LLP as legal adviser, AlixPartners LLP as financial adviser, and PJT Partners Inc. as investment banker, subject to court approval.

Bloomberg News
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