Troubled nuclear builder seen best fit for Asian ambitions

[TOKYO] If Japan's Toshiba Corp parts ways with its embattled US nuclear unit, Westinghouse Electric Co, the likely buyer may be a regional neighbor with global ambitions.

Westinghouse would be a strategic fit in China or South Korea, which are developing their own reactors for export, according to analysts and academics. The region is also home to about half the world's nuclear units under construction, while China is forecast to have the largest fleet fleet of reactors by the middle of next decade.

Toshiba, which is suffering from a 712.5 billion yen (S$8.76 billion) writedown on its nuclear division and selling assets to stabilize its balance sheet, has said it will consider selling Westinghouse to the right partner.

"South Korea and China are probably best placed," said Matthew Cottee, a research associate in the non-proliferation and nuclear policy program at the International Institute for Strategic Studies. "There has been a notable shift in the civil nuclear landscape recently. Former nuclear brands from France and Japan, such as Areva and Toshiba, are in decline." While Westinghouse is shackled by risks from delayed projects in the US, the company may offer a treasure trove of intellectual property and expertise. Half of the world's nuclear reactors incorporate Westinghouse technology, while the company's AP1000 reactor is being considered for orders in a number of growing markets.

Westinghouse has hired PJT Partners Inc to help advise to its business, Bloomberg reported Friday. Pittsburgh-based Westinghouse has also brought in bankruptcy attorneys from Weil Gotshal & Manges LLP, Reuters reported earlier.

"Any sale would likely be preceded by a restructuring of Westinghouse so that the 'new Westinghouse' being sold would be free of any liabilities arising from the current new build projects that Westinghouse is constructing," said George Borovas, the global head of the nuclear group at Shearman & Sterling LLP, a New York-based multinational law firm.

The AP1000 is a so-called generation III+ reactor, designed to be easier and less expensive to install and operate and with enhanced safety features to avoid the kind of disaster Japan suffered during the triple meltdown at Fukushima in 2011. But the new reactors run into tighter regulations and complex designs, resulting in construction delays and rising costs.

While Toshiba doesn't plan to sell a Westinghouse stake at the moment, it will consider it if it finds a partner committed to maintaining and developing the business in a way acceptable to its customers and governments where it operates, company spokeswoman Yuu Takase said by email.

BLOOMBERG