Business / Corporate

Toshiba's U.S. unit Westinghouse to explore Chapter 11 bankruptcy: sources

Kyodo

Toshiba Corp. will explore Chapter 11 bankruptcy for U.S. nuclear power unit Westinghouse Electric Co. among options to rebuild the business while using proceeds from the sale of its mainstay chip business to continue operating it, sources close to the matter said Friday.

Toshiba said earlier this week it expects to post a loss of ¥712.5 billion ($6.32 billion) for the April-December period after already posting ¥250 billion in losses in the previous business year through last March.

Also on Friday, the industrial conglomerate finalized plans to spin off its NAND flash memory chip business into a separate company, saying it is considering selling more than half its stake to restore its fiscal health.

Toshiba is second only to South Korea’s Samsung Electronics for producing chips used in devices such as smartphones. It aims to gain proceeds worth more than ¥1 trillion.

It plans to propose the spinoff at an extraordinary shareholders meeting slated for March 30 and subsequently establish Toshiba Memory Corp. on April 1.

While Toshiba is examining a plan to use funds from the sell-off to continue operating Westinghouse, a quick rehabilitation by filing for Chapter 11 bankruptcy protection from creditors has been proposed, according to the sources.

Toshiba bought Westinghouse, a long-established nuclear power producer in the United States, for about ¥600 billion in 2006.

The U.S. nuclear power unit is facing delays in construction of nuclear power plants at home and in China.