A shock warning from Toshiba that it may have to write down billions of dollars after the purchase of an American nuclear power company went sour has hit its shares. The Japanese conglomerate said cost overruns on power projects handled by a nuclear construction business bought from Chicago Bridge & Iron would be much greater than expected. It will be another blow for the group, which is recovering from a $1.3 billion accounting scandal as well as a writedown of more than $2 billion for its nuclear business in the last financial year. Satoshi Tsunakawa, the chief executive who took over in June after his predecessor embarked on a series of restructuring steps to clean up the books, said the company would look at some kind of strategy to boost capital. The deal between CB&I and Toshiba’s Westinghouse division has been fraught since at least July. The two have been in dispute over who should shoulder liabilities related to overruns and over calculations for working capital. Toshiba bought Westinghouse from British Nuclear Fuels a decade ago in a deal that has come to be seen by some as a mistake by the British government to sell its US-based nuclear power station construction business. Masahiko Ishino, an analyst at Tokai Tokyo Research Center, said the focus may soon shift to whether Toshiba will sell businesses.
Times 28th Dec 2016 read more »
Projects that CB&I Stone & Webster is working on have been hit by delays and cost overruns. In dueling legal claims, Westinghouse and Chicago Bridge & Iron have been disputing how expensive the delays will be and which company should take the financial hit. The purchase was a gamble from the start: The Toshiba subsidiary was paying relatively little to buy the business, but its ultimate costs could end up being many times higher if things went badly. That outcome now looks likely. “Westinghouse has found that the cost to complete the U.S. projects will far surpass the original estimates, mainly due to increases in key project parameters, resulting in far lower asset value than originally determined,” Toshiba said on Tuesday. In the United States, Westinghouse has been working with CB&I Stone & Webster on two projects to expand existing nuclear power stations by building new reactors. The projects, at the V.C. Summer station in South Carolina and the Alvin W. Vogtle plant in Georgia, are several years behind schedule and billions of dollars over budget.
New York Times 27th Dec 2016 read more »
Toshiba Corp said it may have to book several billion dollars in charges related to a U.S. nuclear power plant construction company acquisition, sending its stock tumbling 12 percent and rekindling concerns about its accounting acumen. The Japanese group said cost overruns at U.S. power projects handled by the CB&I Stone & Webster Inc business it acquired last December from Chicago Bridge & Iron Company NV (CB&I) would be much greater than initially expected, potentially requiring a huge write down.
Reuters 27th Dec 2016 read more »
Toshiba shares dived more than 20% on Wednesday in their second straight double-digit plunge as the company said it may book a one-time loss of several billion dollars over its US nuclear business. Toshiba’s stock price dropped by 20.42% to 311.60 yen, the largest fall allowed for a single day, about 30 minutes after the opening bell, as the company failed to remove investor worries over the potential risk. On Tuesday the Tokyo-based conglomerate said costs linked to the acquisition in 2015 by its US subsidiary of a nuclear service company would possibly come to “several billion US dollars, resulting in a negative impact on Toshiba’s financial results”.
Guardian 28th Dec 2016 read more »
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FT 28th Dec 2016 read more »