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Future ownership of Westinghouse shrouded in doubt

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Future ownership of Westinghouse shrouded in doubt

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Future ownership of Westinghouse shrouded in doubt

Chief says company hopes to emerge from bankruptcy protection ‘in next few months’

The Vogtle plant in Georgia © Reuters

Westinghouse will emerge from bankruptcy protection “very soon” but its future ownership remains shrouded in doubt as Toshiba mulls a potential sale of its US nuclear business.

José Gutiérrez, chief executive of Westinghouse, said the company “was in a much better situation” than many people imagined and hoped to emerge from the US Chapter 11 process once a restructuring plan was agreed “in the next few months”.

However, he acknowledged that Toshiba must first decide what it wants to do with the company, with options including a sale of the whole business or parts of it.

Westinghouse filed for US bankruptcy protection in March due to multibillion-dollar cost overruns at two part-built nuclear plants in Georgia and South Carolina.

Toshiba has said it is “actively considering” a sale of Westinghouse as it battles to prevent the business from dragging down the rest of the Japanese conglomerate.

Mr Gutiérrez said PJT, the boutique New York investment bank, was still in the early stages of exploring strategic options for Westinghouse.

He conceded that any sale to a foreign buyer would require US government approval considering the company’s national security importance.

Analysts say political barriers will narrow down an already limited field of potential buyers, with Chinese and Russian companies almost certainly unacceptable to Washington.

Europe’s biggest nuclear companies, Areva and EDF of France, are facing their own financial turmoil and competitors such as General Electric in the US, Hitachi in Japan and Kepco in South Korea are not rushing to rescue their rival.

Mr Gutiérrez said Westinghouse was keeping the US government informed of its progress through Chapter 11 proceedings but dismissed the idea of a federal bailout. “I do not think that is the way the US government works,” he told the Financial Times.

He said it would be “difficult but still possible” to salvage the VC Summer nuclear project in South Carolina, which was suspended in July by its owners, Santee Cooper and South Carolina Electric & Gas Company.

The second US project, Plant Vogtle in Georgia, was given a reprieve last month when its owner, Southern Company, decided to continue construction.

The plants were supposed to be flagships for Westinghouse’s new AP1000 reactor and kick-start a new wave of nuclear development in the US.

Instead, they have become emblematic of difficulties facing the global nuclear industry as regulators demand extra safety measures after the meltdown at the Fukushima nuclear plant in Japan in 2011, delaying projects and increasing costs.

Mr Gutiérrez said Westinghouse would learn lessons from its US setbacks as well as delays in China, where the first AP1000 reactor is due to come online next year.

He remained confident that the technology could win further orders in the US, China and beyond, citing Turkey and India as the most immediate opportunities.

Westinghouse would, in future, not construct nuclear plants but instead focus on its strengths in design, engineering and services.

Mr Gutiérrez noted that the majority of the company’s business revolved around supplying fuel and services to many of the existing 449 nuclear plants in operation around the world, and this business continued to perform well. 

“This company is going to be leaner, stronger and more competitive,” he said. “In other countries bankruptcy is the first step towards liquidation. In the US that is not the case and it is definitely not the case for Westinghouse.”

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