Toshiba reaches deal to help resolve Westinghouse bankruptcy, rebuild finances (updated)

Brookfield Business Partners LP

18/01/2018 04:50

* Toshiba to sell claims in Westinghouse to group led by 
Baupost 
    * Toshiba sees $3.7 bln improvement in capital base 
    * Toshiba to sell its Westinghouse stake to Brookfield 
    * Agreement helps rebuild Toshiba's finances, avoid 
delisting 
 
 (Recasts with Toshiba confirmation of the agreement) 
    By Tom Hals and Jessica DiNapoli 
    Jan 18 (Reuters) - Toshiba Corp  6502.T  said on Thursday it 
had clinched an agreement to sell its claims in bankrupt U.S. 
nuclear plant maker Westinghouse Electric Co LLC in a deal that 
would add $3.7 billion to the Japanese owner's depleted capital 
base.  
    The Japanese conglomerate has also agreed to transfer its 
Westinghouse-related shares to Canada's Brookfield Business 
Partners  BBU_u.TO   BBU.N , which earlier this month agreed to 
buy the unit for $4.6 billion - money that will be used to repay 
the nuclear plant maker's creditors.  urn:newsml:reuters.com:*:nL1N1OZ0XF  
    These deals could help clear Westinghouse's path out of 
bankruptcy before Toshiba's financial year ends in March, while 
also allowing the Japanese firm to resolve its negative net 
worth and stay listed on the Tokyo Stock Exchange. 
    Toshiba said in a statement that it would sell its claims 
against Westinghouse to a group of hedge funds led by the 
Baupost Group, and that the deal that would contribute about 410 
billion yen ($3.68 billion) to its capital base.  urn:newsml:reuters.com:*:nT9N1NJ04K 
    The deal, first reported by Reuters earlier in the day, will 
make the group of hedge funds Westinghouse's biggest creditor, 
helping cut down the fights among several creditors that had 
threatened to slow down the resolution of the bankruptcy. 
    The group led by Baupost has already bought claims worth 
more than $2.2 billion from Scana Corp  SCG.N , a South Carolina 
utility that contracted Westinghouse to build two reactors.  
    The South Carolina project, and another in Georgia, went 
billions of dollars over the fixed-price contract, forcing 
Westinghouse into bankruptcy in March.  urn:newsml:reuters.com:*:nL1N1O606K urn:newsml:reuters.com:*:nL1N1I021Z 
    Westinghouse's bankruptcy pushed Toshiba into a crisis and 
prompted Toshiba to sell its memory chip business for $18 
billion to shore up its balance sheet. The Japanese firm also 
forecast a negative net worth of 750 billion yen at end-March. 
    But finances are set to be shored up by the Baupost deal, 
which includes an after-tax profit of about 170 billion yen from 
the sale of claims and tax benefits of about 240 billion yen, 
Toshiba said. It added the company would promptly announce any 
revised forecasts as appropriate.     
    Toshiba shares rose as much as 2.9 percent in early trade on 
Thursday, and was flat at around 0443 GMT, while the Nikkei was 
up 0.46 percent. 
    Pittsburgh-based Westinghouse, which traces its roots to the 
19th century, was acquired by Toshiba in 2006 for $5.4 billion 
at a time of increased interest in cleaner fuel sources. 
    In recent weeks, Citibank N.A. on behalf of the Baupost 
group of hedge funds has claimed it is owed as much as $7.5 
billion by Westinghouse, alleging among other things gross 
negligence. The allegations are based on the South Carolina 
claims that the Baupost group has acquired. 
    Westinghouse disputed the new claims and said it threatened 
to delay the resolution of the case. 
 ($1 = 111.4100 yen) 
 
 (Reporting by Tom Hals in Wilmington, Delaware and Jessica 
DiNapoli in New York; Additional reporting by Chang-Ran Kim and 
Minami Funakoshi in Tokyo; Editing by Leslie Adler and Himani 
Sarkar) 
 ((thomas.hals@thomsonreuters.com; +1 610 544 2712; Reuters 
Messaging: thomas.hals.thomsonreuters.com@reuters.net)) 
 
Keywords: TOSHIBA ACCOUNTING/WESTINGHOUSE BANKRUPTCY (UPDATE