Toshiba has been obligated to purchase a 40% stake in the UK nuclear energy firm NuGen.
Bankrupt Toshiba Compelled To Buy 40% Stake in UK Nugen
The UK based NuGen has been contracted to construct a new power plant in Cumbria. Engie, the French utility company stated it was exercising its rights to sell its shares given that NuGen was undergoing some significant problems.
Last week, the US based Toshiba Westinghouse, which had been contracted to build the reactors at the Cumbria nuclear plant, filed for bankruptcy protection.
The giant Japanese technology giant has been facing a series of financial difficulties but only its operations in the US would be impacted by the bankruptcy, the company said in a statement.
Media reports suggest that the news of bankruptcy could significantly delay the construction in West Cumbria.
The nuclear plant is expected to provide the UK with up to 75% of its energy needs.
In a statement, Toshiba explained the bankruptcy filing met the definition of an ‘event of default’ according to the agreement it has with Engie.
The statement added, “Engine has exercised its right to require that Toshiba purchase its holding.”
Toshiba will by the 40% stake for an estimated $138.5m.
The Japanese company added that it would seek out investors who want to invest in NuGen and sell its stake in the company.
The difficulties being encountered at Westinghouse have had adverse effects on Toshiba.
In December, it was announced that Toshiba would face a significant loss as a result of a deal undertaken by Westinghouse, which had purchased a business in the nuclear construction niche from Chicago Bridge & Iron company in 2015.
However, the assets acquired from this deal are of no significant worth. Toshiba is also caught up in a dispute about due payments.
In February, it was discovered that losses from the deal would amount to $6.3bn.
Toshiba’s chairman stepped down but the company took months to release its full financial figures.
To make up for the loss, Toshiba plans to sell its majority stake in its flash memory company.
Amidst all these, Toshiba is struggling to rise again following a scandal that involved profit inflation.
According to the UK Department for Business Energy and Industrial Strategy, “NuGen has always been keen on bringing other investors on board to deliver the project.”
The UK Secretary of State in presently in South Korea holding talks on trade opportunities between the two countries, including projects on civil nuclear power.