TOKYO (BLOOMBERG) - Toshiba Corp's board has approved a Chapter 11 bankruptcy filing in the US for its Westinghouse Electric unit after the Japanese company warned of a possible 712.5 billion yen (S$8.95 billion) writedown on the nuclear energy business, Nikkei reported.
The Pennsylvania-based company has been grappling with delays at projects in Georgia and South Carolina, which led to the writedown. The US company's technology forms the basis of about half the world's atomic units.
Toshiba said in February that it expected to book a 712.5 billion yen writedown in its nuclear-power business, citing cost overruns at Westinghouse and diminishing prospects for atomic-energy operations. The Japanese company's bond yields jumped at the end of December after it announced that the potential writedown would exceed the initially anticipated amount of US$87 million. Toshiba received approval to delay reporting third quarter earnings until April 11.
Toshiba's US$5.4 billion purchase of Westinghouse in 2006 may have seemed promising at the time. In 2005, the US government gave nuclear developers a package of tax credits, loan guarantees and cost-overrun backstops. Westinghouse signed deals in 2008 to build four reactors for Southern Co and Scana Corp, the first US nuclear plants since the 1979 accident at Three Mile Island to be approved for construction by regulators.
But costs for the reactors increased after stricter safety standards were put in place in the wake the 2011 Fukushima nuclear accident in Japan. On top of that, a plunge in natural gas prices has made nuclear generation less attractive.