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Toshiba pushing sale of nuclear unit Westinghouse as crisis deepens

Toshiba pushing sale of nuclear unit Westinghouse as crisis deepensToshiba Corp. faced another trouble as it missed the second deadline to report earnings and said it may sell a majority stake in its Westinghouse nuclear business, Bloomberg said on Tuesday.

The Tokyo-based conglomerate is reevaluating Westinghouse’s position within the group and it may deconsolidate the nuclear unit by selling a controlling equity stake. Toshiba made the announcement as it gained approval to delay the release of third-quarter earnings until April 11.

Westinghouse has been at the center of Toshiba’s most recent problems amid cost overruns on nuclear projects and related litigation. While the company was due to report final figures on Tuesday, it said it needed more time to examine reports of “inappropriate pressure” internally to push through the acquisition of a U.S. construction firm specialising in building atomic plants. Toshiba has estimated it will need to take a writedown of 712.5 billion yen ($6.2 billion) but it hasn’t been able to get its auditors to sign off on the earnings results.

“We need further reforms to overcome the difficulties resulting from the accounting scandal and losses in the nuclear business,” said President Satoshi Tsunakawa in a press briefing Tuesday afternoon.

“That’s something myself the management and employees have to take responsibility for and work toward bringing the company back on the path of growth,” he added.

Toshiba said Tuesday it is planning to sell about 160 billion yen of assets in the 2016 fiscal year. It also plans to cut the number of board members and have a majority of directors from outside the company.

Westinghouse appears to be already assembling a team of lawyers and advisers to help with the restructuring. The company has hired PJT Partners Inc., people with knowledge of the matter have said. Lisa Donahue of AP Services, LLC, an affiliate of AlixPartners, will lead the Pittsburgh-based company’s operational restructuring efforts, according to a spokeswoman at Westinghouse. It also brought in bankruptcy attorneys from Weil Gotshal & Manges LLP.

It’s not clear who would be interested in Westinghouse given its problems. The most likely buyers may be from China or South Korea, which are developing their own reactors for export, according to analysts and academics. The region is also home to about half the world’s nuclear units under construction, while China is forecast to have the largest fleet of reactors by the middle of next decade.

The uncertainty over the valuation of Westinghouse has held up the auditor’s approval for Toshiba’s third-quarter earnings. Toshiba now has until April 11 to report earnings, though it can request another extension.
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