Thursday, September 20, 2018
Business

Toshiba casts doubt on ability to stay in business after nuclear power push falters

Toshiba, a pillar of the modern Japanese economy whose roots stretch back to the country's industrial stirrings in the 19th century, warned on Tuesday that a disastrous foray into nuclear power may have crippled its business beyond repair.

In a stock-market filing in Japan, Toshiba said losses associated with Westinghouse Electric, its troubled U.S. nuclear power subsidiary, had created "substantial uncertainty" over its ability to continue as a going concern. The declaration lifts the stakes as Toshiba seeks outside investors for its coveted microchip business, a portion of which it is selling off to raise cash and stave off disaster.

Westinghouse's woes have a strong tie to Florida.

Plans for two reactors that were supposed to be built by Westinghouse in Levy County, north of the Tampa Bay market, were shelved in 2014 by owner Duke Energy after early construction delays and massive run-ups in the anticipated price tag that approached $25 billion to complete the nuclear power plants.

As approved by state legislators and regulators, Duke Energy is able to charge its Florida ratepayers for about $1.5 billion in early construction costs for the Levy plant even though it will probably never be built. Duke Energy spent just enough on the plant site to receive a federal license last fall to proceed with the Levy facility, though the odds of restarting its construction appear slim and will further fade in time.

Florida Power & Light, a giant utility which serves most of southern Florida, has also delayed its planned Westinghouse nuclear expansion at its Turkey Point site near Miami.

Toshiba's uncertain fate represents another blow for a country that has seen its dominance in a range of technologies eclipsed by rivals in South Korea and China.

Few companies have embodied Japan's industrial might like Toshiba, whose products run the gamut from hair dryers to giant gas-fired electricity turbines, as well as nuclear reactors. But it has faced a spate of recent stumbles in core businesses as well as a scandal over falsified profits that came to light in 2015.

Toshiba said it hoped the planned sale of shares in its chip division, its crown jewel, would alleviate the uncertainty over its future. While Toshiba has not said exactly how much of the business it will sell, even a minority stake is expected to be worth several billion dollars.

Any stability, though, would come at a price. Toshiba would be parting with parts of its most profitable asset and giving a competitor — very likely a foreign one — a foothold in the market for flash memory drives, where Japan has managed to retain some of its long-held edge.

"We will do what we can to avoid being delisted from the stock exchange," Satoshi Tsunakawa, Toshiba's chief executive, said at a news conference after apologizing to shareholders for Toshiba's latest worrying turn.

The company reported financial details for the quarter that ended in December after multiple delays and disputes with its auditors.

The financial problems are mounting.

The auditors have refused to certify Toshiba's accounts — a highly unusual signal of doubt about the company's ability to recover its financial health.

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