Westinghouse Electric Co., a unit of Japanese conglomerate Toshiba Corp., filed for bankruptcy on Wednesday, hit by billions of dollars of cost overruns at four nuclear reactors under construction in the U.S. Southeast.
Bankruptcy will allow Pittsburgh-based Westinghouse to assess whether to continue construction of the first new U.S. nuclear power projects in three decades for utility companies SCANA Corp. and Southern Co.
The company also provides nuclear design, engineering and decommissioning work around the globe, and said in court filings its nuclear fuel and power plant servicing operations are “very profitable.”
Westinghouse and affiliates intend to use bankruptcy to “isolate them from the one specific area of their businesses that is losing money: Their construction of nuclear power plants in Georgia and South Carolina,” the company said in a filing in Manhattan’s U.S. Bankruptcy Court.
For Toshiba, the filing will help keep the parent company afloat and protect it from soaring liabilities from Westinghouse. Toshiba said Westinghouse-related liabilities totaled $9.8 billion as of December, making it one of the industry’s most costly collapses to date.
The bankruptcy will trigger complex negotiations between the Japanese conglomerate, Westinghouse and the utility companies, which are among the main creditors. It could also embroil the U.S. and Japanese governments, given the scale of the collapse and the $8.3 billion in U.S. government loan guarantees provided to help finance the reactors.
Westinghouse said in a court filing it has secured $800 million in financing, provided by Apollo Investment Corp., an affiliate of Apollo Global Management, to fund and protect core businesses during its reorganization.
Toshiba said it would guarantee up to $200 million of the financing for Westinghouse.
SCANA, which owns majority of the V.C. Summer project in South Carolina, said it had reached an agreement with Westinghouse to continue the work while it determines “the most prudent path forward for the project.”
Southern Co said it would hold Westinghouse and Toshiba accountable for its contract and was “conducting a full-scale schedule and cost-to-complete assessment.”
Stan Wise, who heads Georgia’s Public Service Commission that regulates Southern Co.’s utility in the state, said the bankruptcy might mean the Vogtle project in Georgia will end up abandoned. The project is about 36 percent complete, according to testimony at a commission meeting in September.
“There is a reason Westinghouse is exiting the process and bankrupt. Something told them the pain for them can only get worse,” said Wise in a Reuters report. “I hope there is a way for this process and contract to continue.”