Westinghouse Electric Company filed for bankruptcy protection today. The filing comes as the company’s corporate parent, Toshiba of Japan, tries to stop huge losses stemming from Westinghouse’s troubled nuclear construction projects in the American South.
Other nuclear plant builders, General Electric, Areva, the French builder, are either scaling back their nuclear work or are undergoing a large-scale restructuring.
Bankruptcy will make it harder for Westinghouse’s business partners to collect money they are owed by the nuclear-plant maker. That mostly affects the American power companies for whom it is building reactors. Now, it is unclear whether the company will be able to complete any of its projects, which in the United States are about three years late and billions over budget.
The power companies — Scana Energy in South Carolina and a consortium in Georgia led by Georgia Power, a unit of Southern Company — would face the possibility of new contract terms, long lawsuits and absorbing losses that Toshiba and Westinghouse could not cover. The cost estimates are already running $1 billion to $1.3 billion higher than originally expected.
The Georgia Public Service Commission, said the utilities developing the Alvin W. Vogtle generating station in the state would have to evaluate whether it made sense to continue. If, in fact, the company comes back to the commission asking for recertification, and at what cost, clearly the commission evaluates that versus natural gas or renewables.
Toshiba said Westinghouse had total debt of $9.8 billion. The Chapter 11 bankruptcy filing was made in federal bankruptcy court for the Southern District of New York.
A decade ago, Toshiba was dreaming of a big global expansion when it bought Westinghouse for a surprisingly high $5.4 billion and made plans to install 45 new reactors worldwide by 2030.
At the same time, Westinghouse was trying to install a novel reactor design, the AP1000. Using simplified structures and safety equipment, it was intended to be easier and less expensive to install, operate and maintain. Its design also improves the ability to withstand earthquakes and plane crashes and is less vulnerable to a cutoff of electricity, which is what set off the triple meltdown at Fukushima.
Westinghouse chose to complete the projects struggled to meet the strict demands of nuclear construction and was undergoing its own internal difficulties after a merger. As part of an effort to get the delays and escalating costs under control, Westinghouse acquired part of the construction company, which set off a series of still-unresolved disputes over who should absorb the cost overruns and how Westinghouse accounted for and reported values in the transaction.
In its bankruptcy filing, Westinghouse said that its top 30 unsecured creditors held over $508 million in claims. Among those creditors are big engineering and construction companies like Fluor and CB&I, and Nuclear Fuel Services, a fuel supplier.
To shepherd its case through Chapter 11, Westinghouse has hired a number of advisers, including the investment bank PJT Partners, the law firm Weil, Gotshal & Manges, and the consulting firm AlixPartners.
Westinghouse also said in its bankruptcy filing that it had taken out an $800 million loan from a group led by Citigroup to support itself through the bankruptcy process. (New York Times, 3/29/2017)