Toshiba's chairman resigns after $6.3B loss in U.S. nuclear business

By Allen Cone   |   Feb. 14, 2017 at 10:14 AM
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Feb. 14 (UPI) -- Toshiba Corp., a Japanese electronics and energy conglomerate, announced Tuesday that its chairman resigned after the company reported a $6.3 billion loss in its U.S. nuclear business.

Shigenori Shiga will step down Wednesday from the board but will remain as a Toshiba executive until a shareholder meeting in June. In a company release, the chairman said he is resigning for "management responsibility for the loss on goodwill and impairment" related to the Westinghouse acquisition of CB&I Stone & Webster from Chicago Bridge & Iron Company.

The company had asked Japanese regulators to extend a noon financial reporting deadline for a month, to March 14. That sent the share price down 8 percent. A few hours later, it disclosed the write-down, along with its most recent quarterly results, which it said was an updated internal assessment.

"We concluded on Monday afternoon that we need further research on the internal reporting ... and its impact on financial results," the company said in a statement. It lawyers and an independent auditing firm were still going over the data.

Pennsylvania-based Westinghouse Electric Company, a nuclear power company, acquired CB&I Stone & Webster in 2015. Toshiba acquired Westinghouse for $5.4 billion in 2006.

In late December, Toshiba warned it would lose several billion dollars from having to write down the value of the U.S nuclear construction business.

The company reported Tuesday it expects to have a negative net worth of $1.3 billion by the end of March.

Toshiba said it wants to sell at least part of its controlling stake in Westinghouse.

"If we can find the right partner, we want to move in that direction," said Satoshi Tsunakawa, Toshiba's president and CEO. "Every possibility is on the table."

Toshiba is building reactors at the Virgil C. Summer nuclear station in South Carolina and the Alvin W. Vogtle nuclear plant in Georgia. Construction is about three years behind schedule and billions of dollars over budget. Toshiba's construction of plants in China also has been delayed.

Toshiba was founded in 1875 as Japan's first manufacturer of telegraph equipment, according to the company website. Worldwide it has 187,809 employees and annual sales of $55 billion through March 2016.

It employs 18,000 workers in the United States.

"This is one of Japan's historic corporations and it's very important to the Japanese economy, so this could be very significant for Japan," Tom O'Sullivan, a Tokyo-based energy analyst told The Washington Post. "It would even impact Japan's sovereign credit rating if there's a knock-on effect."

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