Toshiba subsidiary Westinghouse Electric, which filed for chapter 11 bankruptcy protection in March of last year following losses of $6 billion from its nuclear division, has found a buyer. It is to be acquired by a Canadian company in a deal valued at $4.6bn.
The deal would resolve the fate of a business that has been hamstringing Toshiba for over a year. Shortly after Westinghouse filed for bankruptcy protection in the US, Toshiba warned that its losses jeopardised its ability to continue as a going concern.
Toshiba has sold other key assets, including its highly profitable memory chip unit, in an effort to recover. It has been working to sell Westinghouse for months.
The planned buyer of Westinghouse, Brookfield Business Partners, is the private equity division of a Canadian company, the Toronto-based Brookfield Asset Management. It counts $15.9bn in assets, with investments in energy, construction and industrial operations.
Brookfield commented that Westinghouse had a strong market position "as the largest service provider to nuclear power plants worldwide".
It also noted that most of the firm's profits came from regular services provided under long term contracts. It appears that there is no plans to continue Westinghouse’s former nuclear construction activities.
Brookfield has signed a letter of intent to purchase Westinghouse's global businesses, to be paid for with $1bn in equity and $3bn in debt financing. It is also taking on certain Westinghouse obligations, such as pension and environmental commitments. The firm said it expects the deal to close in the third quarter of 2018, assuming the takeover is approved.
Toshiba acquired Westinghouse in 2006 for more than $5.4 bn, but the prospects for nuclear power have reduced, as oil and renewable energy costs decline and the Fukushima accident hurt the industry's reputation. Cost overruns and other losses at two projects in the US led to the bankruptcy filing in 2017.