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As Crisis Deepens, Sale Of Nuclear Unit Westinghouse Being Pushed By Toshiba

As Crisis Deepens, Sale Of Nuclear Unit Westinghouse Being Pushed By Toshiba
As Toshiba Corp expanded a probe into problems there that caused it to miss an earnings deadline for a second time, the Japanese conglomerate is 'actively considering' a sale and other strategic options for U.S. nuclear unit Westinghouse, the group said on Tuesday.
Despite the potential for future losses as the unit had a stable fuel and services business, the Japanese conglomerate said it believed it could find buyers for a majority stake in Westinghouse.
But by saying only there were various options. Sources have said bankruptcy lawyers have been hired as an exploratory step, Chief Executive Satoshi Tsunakawa sidestepped questions about a potential Chapter 11 filing for Westinghouse.
A multibillion dollar financial maelstrom is stemming or Toshiba from Westinghouse's ill-fated purchase of a U.S. nuclear power plant construction company in 2015 and a sale would represent the latest in a series of drastic steps by the group to cope with the situation.
To cope with an upcoming $6.3 billion writedown for the nuclear business and to create a buffer for potential losses down the road, it has already put up most or even all of its prized memory chip business for sale.
Liabilities related to projects in Georgia and South Carolina means that Westinghouse is unlikely to be an easy asset to sell, despite attractive technology and the company has been plagued by huge cost overruns at these two U.S. projects.
The projects were only a small part of Westinghouse's business, Tsunakawa emphasized.
"Around 80 percent of Westinghouse's revenues come from stable businesses in services and fuel-related businesses so I think that will be taken into consideration too," he told a news conference.
Whether Toshiba would have to pay the buyer to take Westinghouse off its hands or whether Toshiba would be paid by the buyer is still not clear, he however added. He said that by the end of the next financial year in March 2018, Toshiba aims to have Westinghouse off its consolidated accounts.
As South Korea's KEPCO expands in nuclear after a successful deal in the United Arab Emirates, it is seen by industry executives as the only potential buyer.
It would consider an approach by Toshiba, KEPCO said on Tuesday. "We will review the overall project and weigh how beneficial this project would be to us," a spokesman said.
In the accounting for the acquisition of the U.S. nuclear power plant construction company in its third-quarter earnings, certain Westinghouse senior managers had exerted 'inappropriate pressure', Toshiba said its auditing committee had confirmed earlier in the day.
Whether there were 'other inappropriate pressures' at the time of the acquisition and if pressure was exerted in preceding quarters as it would also be filing nine-month results are the two things that the TVs-to-construction conglomerate now needs to check.
Including improving board level oversight, internal controls, risk management and headquarters' grip on the activities of its affiliates, it would also introduce fresh measures to overhaul its governance, said Toshiba, for whom the latest scandal is its second in two years.

Christopher J. Mitchell

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