Toshiba has decided to liquidate a nuclear power subsidiary in charge of a power plant project in the UK as well as its U.S. LNG operations, the company said in a statement, citing its inability to continue operating the business and its failure to find buyers for it.
Toshiba will also liquidate another nuclear subsidiary in the UK, Advance Energy UK Limited. The loss that the company will book from the wind-ups will come in at US$130 million (15 billion yen) and will be booked in its 2018/19 results.
In LNG, Toshiba will sell a contract to buy 2.2 million tons annually of LNG from the Freeport terminal in Texas, Reuters reports. The Japanese conglomerate will transfer to the buyer the US$7-billion contract and pay them US$821 million. The name of the buyer, however, remained a secret.
Earlier this year, Toshiba sold its U.S. nuclear power business, Westinghouse, for US$4.6 billion to a group of investment companies led by Brookfield Asset Management. The deal puts an end to a major headache for the Japanese conglomerate, which last year warned that it might have trouble surviving if it didn't find a buyer for the nuclear power plant constructor, which it acquired in 2006 for US$5 billion.
Plagued by project delays and cost overruns that came up to US$6 billion for two large-scale projects in the United States, Westinghouse filed for Chapter 11 bankruptcy protection last March. The business had by that time generated US$6.3 billion in writedowns for the parent company that resulted in Toshiba reporting a net loss of US$9.1 billion for 2016.
Shareholders have been growing increasingly impatient with Toshiba, especially since 2015, when the company was hit by an accounting scandal. Judging by the reaction of its stock to the liquidation and sale announcements, they welcomed the moves: Reuters reports Toshiba's shares gained 13.7 percent after the announcement, climbing close to a two-year high.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More