Westinghouse bankruptcy may limit Toshiba’s looming losses

Bloomberg

Toshiba Corp., reeling from an impending multibillion-dollar writedown in its Westinghouse Electric unit, has been battered to the point where a possible bankruptcy of the nuclear equipment business is being cheered by investors.
Shares in the electronics conglomerate rose 6.9 percent in Tokyo, the most in a month, after Toshiba said Westinghouse’s board will decide whether to file for bankruptcy, suggesting that it’s one of the options under consideration. Reuters reported earlier that Westinghouse’s utility customers have hired advisers in preparation for its possible bankruptcy.
Toshiba has been grappling with construction delays at Westinghouse projects that could result in a writedown of 712.5 billion yen ($6.2 billion), though it hasn’t been able to get auditors to sign off on the final figures.
The company said earlier this month that it’s reevaluating Westinghouse’s position within the group and it may deconsolidate the subsidiary by selling a controlling equity stake.
“Westinghouse’s bankruptcy is really the only way for Toshiba to limit the risks of further losses in the business,” said Kazunori Ito, an analyst at Morningstar Investment Services.
“If there is a reason for the shares to be up today, it may be because some believe that the Chapter 11 process is coming along.”
Westinghouse also 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, is leading the Pittsburgh-based company’s operational restructuring efforts.
Scana Corp. and Southern Co., the utilities involved in the construction delays, have hired advisers in preparation for its possible bankruptcy, Reuters reported, citing unidentified people familiar with the matter. Westinghouse has also brought in bankruptcy attorneys from Weil Gotshal & Manges LLP, according to Reuters.