Toshiba’s financial crisis puts Britain’s nuclear power plans into doubt

Toshiba puts UK’s nuclear power plans under threat: Fears that crisis will halt Japanese firm’s investment in British plant http://www.thisismoney.co.uk/money/markets/article-4074492/Toshiba-puts-UK-s-nuclear-power-plans-threat-Fears-crisis-halt-Japanese-firm-s-investment-British-plant.html By Rachel Millard For The Daily Mail 30 December 2016 Britain’s nuclear power plans have been thrown into doubt as a financial crisis grips the company behind one of the country’s biggest projects.

Japanese company Toshiba owns a 60 per cent stake in the planned £10billion NuGen nuclear power project in Moorside, Cumbria, which aims to supply power for about 6million homes from 2025.

But shares plunged at Toshiba for the third day running yesterday after it warned of a multi-billion dollar write-down involving its US nuclear subsidiary.

Forty per cent has been wiped off the company’s value since it said on Monday that its US nuclear subsidiary Westinghouse Electric may have overpaid by several billions of dollars for another nuclear construction and services business.

Westinghouse UK is providing the reactors for the planned project in Cumbria, the rest of which is owned by French company Engie, and would be one of Europe’s largest nuclear power plants.

Moody’s investor service has downgraded Toshiba’s ratings and warned the writedown could affect the company’s ability to pay its debts, little over a year after its finances were seriously hit by an accounting scandal.

Justin Bowden, the GMB union’s national secretary for energy, said: ‘It needs to be established as soon as possible whether or not the collapsing Toshiba share price, in particular in relation to its Westinghouse operation, has any implications, and if so what these are for the extremely important Westinghouse project.’

Masako Kuwahara, a Moody’s vice-president, said: ‘The downgrade of Toshiba’s ratings principally reflects Moody’s deepening concerns over the sustainability of Toshiba’s near-term liquidity, as well as the substantive and rapid erosion of its equity base.

‘Although Toshiba is still assessing the exact amount of the impairment loss, its financial metrics will likely deteriorate further, potentially resulting in a negative equity position.’

Moody’s added that if Toshiba breached its debt obligations, its ability to stay solvent would depend on banks’ support.

‘The availability of such support in such a situation, is currently uncertain,’ Moody’s added.

Bankers and analysts said the latest shock could force Toshiba to trim down its businesses.

‘If the company wants to survive, it needs to go through a scrap-and-build process,’ said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Toshiba’s problems come after NuGen said it was in talks with potential investors for the Cumbria site, with a final investment decision due in 2018.

It is potentially a blow to the Government after ministers had described 2016 as a ‘year for the industry to look back on’ following backing for a new plant at Hinkley Point in Somerset.

Then UK energy minister Lucy Neville-Rolfe said Hinkley Point would ‘trigger this country’s nuclear renaissance’. But the GMB’s Bowden said: ‘We are one step away from the lights going out.’

NuGen yesterday declined to comment and Toshiba could not be reached for comment.

A Department for Business, Energy and Industrial Strategy spokesman said: ‘We are working closely with developers on a number of proposed new nuclear projects in the UK, as they develop their plans.’