Toshiba decides on
Westinghouse bankruptcy, sees $9 billion in charges:
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[March 24, 2017]
By Taro Fuse
(Reuters) - Japan's Toshiba Corp has informed its main lenders it is
planning for U.S. nuclear unit Westinghouse Electric Co LLC to file for
bankruptcy on March 31, people briefed on the matter said on Friday.
Toshiba expects a Chapter 11 filing for Westinghouse would expand
charges related to the U.S. unit in the current financial year to around
1 trillion yen ($9 billion) from its publicly flagged estimate of 712.5
billion yen, the people also said.
A move to file, however, allows the TVs-to-construction conglomerate to
limit risks from future losses at Westinghouse, which has been plagued
by huge cost overruns at two U.S. nuclear projects. The decision comes
only three months after Toshiba first warned of multibillion dollar
charges for Westinghouse.
The ensuing financial maelstrom has already caused Toshiba to put up its
prized memory chip unit for sale, consider a sale of a majority stake in
Westinghouse and miss deadlines to file earnings that have put it at
risk of a delisting.
Toshiba is now in discussions with the lenders over financing after
Westinghouse's potential Chapter 11 filing, said the people, who
declined to be identified as they were not authorized to speak to media
on the matter.
Toshiba said on Friday it was not appropriate to comment prematurely.
"Whether or not Westinghouse files for Chapter 11 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," it
said in a statement.
Toshiba's main creditor banks include Sumitomo Mitsui Banking Corp and
Mizuho Bank Ltd. Representatives for the bank were not immediately
available for comment outside regular business hours.
Reuters reported earlier this week that Westinghouse was reviewing
proposals for a debtor-in-possession loan exceeding $500 million to help
finance a potential bankruptcy.
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The logo of Toshiba Corp. is seen at the company's facility in
Kawasaki, Japan February 13, 2017. REUTERS/Issei Kato/File Photo
in Toshiba soared 7.6 percent on Friday after Singapore-based fund Effissimo,
established by former colleagues of Japan's most famous activist investor,
became its largest shareholder with an 8.14 percent stake.
fund said the holding was for pure investment purposes and it expected long-term
price gains to be driven by an increase in Toshiba's corporate value.
Separately the Japanese government said it would conduct rigorous screening of
any potential buyer of Toshiba's chip unit based on foreign exchange and trade
laws if need be.
The Japanese government is prepared to block the sale to bidders it deems a risk
to national security, sources have said previously.
"Toshiba's chip business is highly competitive globally and it plays a key role
for the nation's employment," Trade Minister Hiroshige Seko said at a media
briefing on Friday.
"The seller needs to consider these issues before the buyer is decided if the
business is going to be sold to foreigners," he added.
Toshiba also plans offer shares of the chip unit as collateral to its lenders,
aiming to protect the unit from claims by Westinghouse creditors, sources have
(Reporting by Taro Fuse and Makiko Yamazaki; Additional reporting by Junko
Fujita and Ami Miyazaki; Editing by Edwina Gibbs)
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