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Toshiba to explore alternatives to sell its Westinghouse related assets

Staff Writer |
Toshiba Corporation announced that, as approved by its board of directors, it has decided to explore alternatives to sell to a third party its claims against Westinghouse Electric Company, including for reimbursement, along with the investment in Westinghouse, subject to obtaining certain required regulatory approvals.

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The successful completion of such efforts will allow Toshiba to significantly reduce the internal resources that it is required to allocate to Westinghouse’s rehabilitation proceedings, and to focus them on cultivating its new businesses.

Following Westinghouse’s filing of Chapter 11 in March 2017, Toshiba successfully negotiated with the owners of the Vogtle project, and entered into a settlement agreement in June 2017.

The agreement sets the limit of Toshiba’s parent company guarantee obligation at US $3.68 billion, and specifies that payments are to be made in installments during the period from October 2017 to January 2021.

In July, Toshiba also successfully entered into a settlement agreement with the owners of the V.C. Summer project, which sets the limit of Toshiba’s parent company guarantee obligation at US $2.168 billion, and specifies that payments are to be made in installments during the period from October 2017 to September 2022.

However, both maximum guarantee amounts are specified in U.S. dollars, and payments to both are to be made at the same time, exposing Toshiba to extremely high risks in respect of fluctuations in currency exchange rates associated with such huge amount of debt.

Toshiba Corporation, as approved at its board of directors, has decided to proceed with a financing transaction (the Financing) expected to close on December 5, 2017.

The proceeds from the Financing will be used to offer to make full payment of parent company guarantee related to nuclear power construction project of Westinghouse Electric Company.