Reports: Toshiba to shop Westinghouse
Local officials remain upbeat
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Eagle Staff Writer
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March 18, 2017
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Reports that the embattled Japanese company Toshiba has decided to explore the sale of its U.S. nuclear arm, Cranberry-based Westinghouse, threw more uncertainty into the company’s future. But township and county officials said Tuesday that they remain upbeat about the future.
The reports Tuesday, first published by news agency Reuters, followed an announcement on Monday by Toshiba that it was seeking a second extension for filing its audited third quarter earnings report with Japanese regulators. That request was granted, and the company — which said it was widening an internal probe into certain Westinghouse senior managers — now has until April 11 to file the earnings report.
Toshiba has been embroiled in a financial crisis since earlier this year, when it announced that it would book a $6.3 billion write-down on Westinghouse and expressed regret for getting involved with the company in the first place.
Toshiba bought Westinghouse in 2006 for $5.4 billion — a foray into the nuclear power business that failed in spectacular fashion and has forced Toshiba to explore selling off all of its lucrative flash memory business to raise the capital necessary to perform the write-down.
Toshiba President Satoshi Tsunakawa talked openly on Tuesday about exploring the sale of Westinghouse, and the company also posted an investor presentation outlining Toshiba’s 2018 financial future without Westinghouse in its portfolio.
Meanwhile, Westinghouse has reportedly brought in bankruptcy attorneys, according to news agency Reuters, and the company announced last week that it had hired Lisa Donahue of the advisory firm AlixPartners as its chief transition and development officer, to lead “an operational restructuring and financial rebuilding.”
While Westinghouse’s ultimate fate remains unclear, township and county officials say they remain optimistic.
Cranberry Township manager Jerry Andree said the reports Tuesday were “not at all” worst-case scenarios for the township. He said Westinghouse has a strong base on which to build.
“If you look at Westinghouse’s history, they’ve been bought and sold several times,” Andree said. “Selling it does not overly concern us. Our concern is about the employees over there. We hate to think about folks losing their jobs.”
In February Andree put together a presentation for economic development experts and Butler County commissioners that floated a true worst-case scenario: Westinghouse leaving its Cranberry Woods headquarters, and taking more than 2,200 jobs with it.
Ken Raybuck, the executive director of Butler County Community Development Corporation, said he doesn’t believe that’s in the cards because Westinghouse has other aspects of its business that are strong.
“Obviously any potential lessening of the work force is a concern for us,” said Raybuck. “But they’re a huge company. They have outstanding contracts. Anything could happen, but obviously they have to keep employees involved to complete contracts.”
In addition to its construction work in the nuclear sector — the endeavor at the heart of the current financial troubles for both Toshiba and Westinghouse — Westinghouse also has a fuel and services business that Toshiba CEO Satoshi Tsunakawa called “stable” at a news conference Tuesday.
Raybuck said that the majority of the company’s employees don’t live in Cranberry Township or Butler County, and said the prospects for economic growth there are good, regardless of what might happen with Westinghouse.
“There’s still an impact if they do announce some reduction,” Raybuck said. “But based on the kind of growth we’ve been seeing in Cranberry Township in the past decade or two, and expecting it to continue, we hope there’s new opportunities for those who may lose their employment with Westinghouse.”
According to the presentation compiled by Andree, the township is home to 24,889 jobs, with 90 percent of workers living outside the municipality. According to data maintained by the township, more than 600 employees at Westinghouse’s Cranberry headquarters live in Butler County. Slightly more than half (334) live in Cranberry Township.
Westinghouse, which reportedly brought in bankruptcy attorneys last week, said in a statement that Toshiba’s statements hadn’t changed the company’s day-to-day operations.
“Westinghouse is continuing our normal operations and our base business remains strong,” said company spokesman Sarah Cassella.
She declined to comment on reports that the company had hired the firm Weil Gotshal & Manges, which led its 2015 acquisition of a U.S. nuclear power plant construction company from Chicago Ridge and Iron, to help it evaluate a possible Chapter 11 filing. Chapter 11 is a type of bankruptcy that allows a corporation or partnership to reorganize and pay creditors over time.
Japanese regulators said last week that Westinghouse needs to decide by the end of the month whether it will file for bankruptcy.
Eagle staff writer Rachel Wagoner contributed to this report.