Exclusive: Westinghouse’s clients gear up for bankruptcy fight – sources

March 23, 2017

By Jessica DiNapoli

(Reuters) – The U.S. utilities that are clients of Toshiba Corp’s nuclear power plant construction subsidiary, Westinghouse Electric Co LLC, have hired advisers to prepare for its potential bankruptcy, according to people familiar with the matter.

The move comes as Toshiba sees Westinghouse’s bankruptcy as increasingly likely. The Japanese conglomerate has hired restructuring consulting firm Berkeley Research Group LLC and law firm Skadden, Arps, Slate, Meagher & Flom LLP to help defend it against bankruptcy claims, the people said on Wednesday.

Scana Corp and Southern Co, the power utilities which hired Westinghouse to build the first nuclear power plants in the United States in more than 30 years, have also hired restructuring advisers, the people said.

This is because, in a potential Westinghouse bankruptcy, Scana and Southern Co would be among Westinghouse’s largest creditors, owed the cost overruns on the projects, which tally in the billions of dollars, one of the people added. The utilities are hoping to recover these costs in a bankruptcy process for Westinghouse, according to the sources.

Scana has hired restructuring experts from advisory firm Ducera Partners LLC, while Southern Co is working with investment bank Rothschild & Co, the people said. Scana owns the South Carolina plant under construction, while Georgia Power, a subsidiary of Southern Co, will own plants in Georgia.

“Whether or not Westinghouse files for Chapter 11 (bankruptcy) is ultimately a decision for its board, and must take into account the various interests of all of its stakeholders, including Toshiba and its creditors,” Toshiba said in a prepared statement. “It is not appropriate for Toshiba to comment prematurely.”

The conglomerate has also said bankruptcy is one of several options for Westinghouse, which it acquired for $5.4 billion about 10 years ago.

The sources asked not to be identified because preparations for a potential Westinghouse bankruptcy are confidential.

“We’re continuing to monitor the situation with Westinghouse and are prepared for any potential outcome,” Georgia Power said in a prepared statement.

Spokespeople for Berkeley Research Group, Scana and Skadden did not immediately respond to requests for comment. Ducera and Rothschild declined to comment.

Toshiba has said it would take a $6.3 billion writedown related to Westinghouse, and gained an extension from Japanese regulators until April 11 to submit its latest quarterly financial results or face having its public shares delisted from the Tokyo Stock Exchange.

Reuters reported earlier this week that Westinghouse was reviewing proposals for a debtor-in-possession loan exceeding $500 million to help finance its potential bankruptcy. Westinghouse has already hired restructuring counsel, Reuters reported earlier this month.

(Reporting by Jessica DiNapoli in New York; Editing by Stephen Coates)

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