Dive Brief:
- Toshiba Corp. said this week that it will sell its Westinghouse Electric claims to Nucleus Acquisition LLC, a consortium controlled by The Baupost Group. The deal will help to shore up Toshiba's finances and to facilitate the sale of the nuclear engineering firm.
- According to Bloomberg, the sale will add about $3.7 billion to Toshiba's balance sheet, which will help the troubled company avoid having its shares delisted.
- Toshiba also said it has signed a share purchase agreement with Brookfield WEC Holdings, for its shares in Westinghouse. Earlier this month, a group led by Brookfield Business Partners LP announced it would purchase Westinghouse for $4.6 billion.
Dive Insight:
Toshiba continues to work on completing the sale of bankrupt Westinghouse, but also faced the pressing potential that its shares might be delisted from the Tokyo Stock Exchange. Two years of negative shareholder equity is grounds to consider the move, but according to Toshiba's statement, the sale of Westinghouse and other asset sales should address the issue.
"Toshiba expects to resolve its negative shareholders' equity status for March 31, 2018," the company said.
Westinghouse declared bankruptcy last year that later revealed problems at two high-profile nuclear projects. The V.C. Summer project in South Carolina and the Vogtle nuclear project in Georgia ran far over budget and behind schedule. The projects' difficulties and subsequent bankruptcy of Westingouse have compelled questions about the future of the country's nuclear industry and the chances for new nuclear build.
Brookfield's purchase will be funded with approximately $1 billion of equity, approximately $3 billion of long-term debt financing and the balance by the assumption of certain pension, environmental and other operating obligations.
According to Reuters, the Baupost conglomerate has made claims that it is owed $7.5 billion by Westinghouse. Purchasing the nuclear engineering firm would help to simplify the complicated deal.
