The Westinghouse unit of Japanese technology giant Toshiba plunged into bankruptcy reorganization Wednesday, facing cost overruns and delays with its U.S. nuclear plant projects.
Founded by American inventor George Westinghouse in 1886, the Cranberry Township, Pa.-based Westinghouse plans to restructure its business after securing $800 million in bankruptcy financing to continue operating.
But the Chapter 11 filing places Westinghouse's nuclear projects in South Carolina and Georgia in jeopardy and threatens to drag down Toshiba itself.
It also casts doubt on the viability of other nuclear projects amid a slowdown in activity following the Fukushima disaster in Japan in 2011.
Competing energy sources, including natural gas and renewables, have also presented alternatives. U.S. nuclear power generating capacity has remained flat since 1990, according to the Energy Information Administration.
The bankruptcy means the future of Westinghouse's under-construction plants in Georgia and South Carolina is "uncertain," Lisa Donahue, restructuring chief of consultancy AlixPartners and chief transition and development officer of Westinghouse, said in a court filing. Westinghouse nuclear reactors power Navy submarines.
Photos | Plant Vogtle nuclear power plant
The company filed for bankruptcy protection in New York, having accumulated $9.8 billion in debt spread among some 35,000 creditors. Westinghouse has about 12,000 employees.
Toshiba warned Wednesday that its full-year loss might balloon to as much as $9.1 billion, up from a previous estimate of $3.5 billion.
Westinghouse said it had reached deals with owners of the U.S. nuclear plants it's constructing to "continue these projects during an initial assessment period." The company said the bankruptcy does not affect its operations in Asia, Europe, the Middle East and Africa.
But contracts to construct plants could be subject to cancellation in bankruptcy.
"We are focused on developing a plan of reorganization to emerge from Chapter 11 as a stronger company while continuing to be a global nuclear technology leader," Interim President and CEO José Emeterio Gutiérrez said in a statement.
Atlanta-based utility Georgia Power — a division of Southern Co. and co-owner of the Vogtle nuclear plant in Waynesboro, Ga., that's under construction by Westinghouse — said it's working with regulatory partners and co-owners "to determine the best path forward" for the plant.
"While we are working with Westinghouse to maintain momentum at the Vogtle site, we are also currently conducting a full-scale schedule and cost-to-complete assessment to determine what impact Westinghouse’s bankruptcy will have on the project," Georgia Power spokesman Jacob Hawkins said in an email.
South Carolina Electric & Gas Co., a division of Scana, said construction would continue on the nuclear plant being built by Westinghouse in Fairfield County, S.C. The company said in a statement that it reached an agreement to continue work during a "transition and evaluation period" while it assesses "the most prudent path forward for the project."
"What I can tell you now is that with around 5,000 contractor and subcontractor personnel on site today, we continue to make progress with construction of these new units," Scana spokesperson Rhonda O'Banion said.
U.S. Nuclear Regulatory Commission spokesman Scott Burnell said the agency is monitoring the reactor sites "to ensure the facilities are built according to their licenses."
The bankruptcy filing comes after Toshiba booked a $6.1 billion writedown in February for cost overruns at U.S. nuclear construction sites tied to the recent acquisition of a subsidiary of Chicago Bridge & Iron.
Toshiba said it had guaranteed $200 million of Westinghouse's bankruptcy financing, but it expects the division to be removed from its financial results following the bankruptcy.
Westinghouse technology covers about half of the world's commercial nuclear reactors and 60% of the 61 nuclear power plants in the U.S., according to a court filing.
Nuclear energy currently generates about 20% of the nation's electricity.
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