Toshiba Corp. has agreed to pay $3.68 billion in guarantees to Southern Co. over two unfinished nuclear reactors that were being built by the conglomerate’s now-bankrupt nuclear unit, it said Saturday.
Under the agreement sealed Friday, Toshiba will pay parent-company guarantees to the U.S. utility firm in installments from October this year through January 2021.
Toshiba concluded a parent-company guarantee contract with Southern when its affiliate Westinghouse Electric received an order in 2008 to build two nuclear reactors in Georgia.
The payment will have no impact on its provisional earnings results released last month without the auditor’s approval, Toshiba said.
Toshiba projects its group net loss to have widened considerably to a record ¥950 billion in the year ended in March, putting it in the red for the third consecutive year due to huge losses from its U.S. nuclear business.
Toshiba and Southern also agreed that the U.S. utility will not ask for more guarantees exceeding the value concluded in Friday’s agreement. If the expenses turn out lower than expected, Toshiba will receive some of the unused sum, it said.
“We are happy to have Toshiba’s cooperation in connection with this agreement which provides a strong foundation for the future of these nuclear power plants,” Southern CEO Thomas Fanning said in a statement.
Toshiba is also in talks with another U.S. utility, South Carolina Electric & Gas, over two reactors that were being built by Westinghouse, which filed for Chapter 11 bankruptcy protection in March.
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