Toshiba’s exposure to troubled US nuclear unit to increase

Toshiba is now set to have a higher exposure to its US nuclear unit Westinghouse.

Japanese heavy machinery maker IHI said it will exercise an option to sell its 3 per cent stake in Westinghouse, bringing Toshiba’s total holding to 90 per cent.

The widely expected sale came after Toshiba warned of a $6.3bn writedown on its US nuclear business earlier this week, blaming massive cost overruns and delays linked to the construction of nuclear reactors in the US.

IHI acquired the Westinghouse stake for $162m in 2006 when Toshiba acquired the nuclear business from the British government’s BNFL for $5.4bn. Toshiba will buy back IHI’s holding for Y18.9bn ($167m) in mid-May.

In announcing the writedown, Satoshi Tsunakawa, Toshiba’s president, admitted the Westinghouse deal was a mistake and that the company would seek to sell its controlling stake in the subsidiary.

But the company has been trying to sell the stake for years, and few analysts see an obvious buyer other than the Chinese or the Koreans.

Before it finds any buyer, the scandal-plagued conglomerate may end up holding a 100 per cent stake in Westinghouse. According to its contract with Toshiba, Kazatomprom, the Kazakh state atomic power company, can also exercise its option to sell its 10 per cent stake from Oct 1.

Shares in Toshiba fell 9.2 per cent after rating agency S&P Global said it was monitoring support for the company from creditors and would consider downgrading the conglomerate if that support includes any form of debt restructuring.