Shares in Toshiba fell by 20 per cent yesterday as investors continued to panic after a warning that it may have to write down billions of dollars at its US nuclear business. On Tuesday Toshiba revealed that it could suffer “several billion dollars” of impairment losses on part of its Westinghouse nuclear business in the US over the purchase of a construction and services business from Chicago Bridge & Iron in 2015. In the UK the company could face questions over the impact that its problems may have on NuGen, a joint venture with Engie, the French energy services group, which plans to create a new generation nuclear power station in west Cumbria. The reactor technology is to be provided by Westinghouse. Standard & Poor’s downgraded Toshiba to B- from B, with a negative outlook, saying that it expected shareholder equity to “drastically shrink”. The company said that it would take until February to establish the impact of the writedown but would not say whether it would wipe out its value.
Times 29th Dec 2016 read more »
Toshiba shares slumped sharply on Thursday, the third straight day of heavy losses. The Japanese industrial giant has now had more than 40% of its value wiped off since 26 December. It comes after the firm’s chairman apologised and warned that its US nuclear business may be worth less than previously thought. Shares were down 26% at one stage in Tokyo, but pulled back some of those loses to close 17% lower. Toshiba stocks had already lost 20% on Wednesday and 12% on Tuesday. Toshiba said on Wednesday that it faced a possible heavy one-off loss, linked to a deal done by its US subsidiary, Westinghouse Electric. Westinghouse bought a nuclear construction and services business from Chicago Bridge & Iron in 2015. But assets that took on are likely to be worth less than initially thought – and there is also a dispute about payments that are due. It has this week also reported “inefficiencies” in the labour force at CB&I, along with other factors driving up costs. The size of the writedown is not likely to be established until February, but is expected to run to several billion dollars. Toshiba’s nuclear business has not made a profit since 2013. And while the firm has said the writedowns announced this week were a one-off, nuclear services globally are struggling. Since the Fukushima disaster in 2011, nuclear energy has been a much harder sell. Some governments have opted to scale back how much they planned to rely on nuclear as an electricity source, or (as in the case of Taiwan) turn away from nuclear energy altogether to focus on renewables. Big nuclear projects around the world have faced heavy delays, partly caused by a lack of skilled workers needed to meet regulatory standards. For example in the US, Westinghouse (which Toshiba bought in 2006) is working on two new generation nuclear reactors in Georgia and South Carolina which are running late and over budget.
BBC 29th Dec 2016 read more »
Shares in Toshiba fell 17 per cent to ¥257 on Thursday, taking the total loss of equity value to more than 40 per cent since the Japanese company announced that it was facing a multibillion-dollar writedown at its US nuclear division Westinghouse. As investors continued to digest Tuesday’s warning, shares in some of Japan’s biggest banks slid after the electronics-to-nuclear conglomerate raised the prospect of losses on their loans. Sumitomo Mitsui Trust – which has a particularly large exposure to Toshiba as a share of equity – fell 4.1 per cent on Thursday while the megabanks Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group and Mizuho Financial were down between 1.9 per cent and 2.5 per cent. The declines suggested a high risk of a debt-to-equity swap or other restructuring at Toshiba, underlining the severity of its crisis over accounting for US nuclear contracts. Toshiba declined to comment. The company has said it does not expect to announce the precise size of the necessary write-off until February, leaving analysts speculating that it could fall into negative equity, and investors unwilling to trust its disclosure.
FT 29th Dec 2016 read more »
Toshiba Corp. plunged by the most on record as the once heralded U.S. nuclear renaissance turns into a nightmare for the Japanese company. The shares fell by 20 percent, the most since 1974, according to available data, to close at 312 yen in Tokyo, following a 12 percent drop Tuesday. Toshiba said it may have to write down billions related to an acquisition made by U.S. unitWestinghouse Electric that was geared toward completing the newest generation of reactors at two U.S. facilities. The projects, overseen by utilities Southern Co. and Scana Corp., are years behind schedule and billions of dollars over budget.
Bloomberg 27th Dec 2016 read more »
Toshiba was looking to profit from a global nuclear power revival when it paid $5.4 billion for Westinghouse Electric in 2006. Instead, cost overruns and missed deadlines threaten to sink the Japanese conglomerate.
Wall St Journal 29th Dec 2016 read more »