nuclear-news

TEPCO shareholders to lose their whole investment

After repaying borrowings due this year and next, Tepco should have 8 trillion of net debt,

Tokyo nuclear firm protected, but not shareholders. Reuters , Mar 24, 2011  By John Foley HONG KONG — The owner of Japan’s stricken nuclear reactors should emerge from the wreckage intact. But shareholders in Tokyo Electric Power, whose Fukushima complex was damaged by this month’s earthquake, could lose their entire investment.

Tepco has just turned to Japanese banks for 2 trillion yen ($25 billion) in emergency funding which should at least prevent a nuclear crisis turning into a financial crisis. Investors are already pricing in losses, but if further big claims arise — as seems possible — the company’s equity could be wiped out.

Tepco shares have dropped almost 60 percent since the quake, destroying almost 2 trillion yen of value. The losses will come in three kinds. First is the cost of rebuilding, and writing down the value of the worst-hit plant. That may come to 580 billion yen, according to Nomura.

Then there is the cost of maintaining output. With reactors knocked out, Tepco will have to turn to alternatives like coal or oil………..After repaying borrowings due this year and next, Tepco should have 8 trillion of net debt, leaving 3 trillion of equity. Deduct the above costs, and the shares should be worth 1.9 trillion yen, or 945 yen a piece — about 30 percent more than their value on March 24. That leaves little room for the third slug of costs: damages claims. How big those may be is imponderable…..

Tokyo nuclear firm protected, but not shareholders | Reuters Breakingviews | Analysis & Opinion | Reuters.com

March 26, 2011 - Posted by Christina Macpherson | business and costs, Japan