by: YURI KAGEYAMA, AP Business Writer Updated:TOKYO (AP) - Japan's embattled Toshiba Corp. said Wednesday that its U.S. nuclear unit Westinghouse Electric Co. has filed for bankruptcy protection.
Toshiba said in a statement that it filed the Chapter 11 petition in the U.S. Bankruptcy Court of New York. The move had been largely expected.
Toshiba is expecting a loss of 500 billion yen ($4.3 billion) for April-December of last year, including a 712.5 billion yen ($6.2 billion) hit from its embattled nuclear business.
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Toshiba acquired Westinghouse for $5.4 billion in 2006 with much fanfare, making nuclear power an important part of its business strategy.
With more than 2,200 employees, Westinghouse is a major employer in Butler County and the largest employer in Cranberry Township. The company has more than 4,000 employees across western Pennsylvania.
"I think the writing's on the wall and it's going to be sold. And I feel sorry for all of the employees," said Rita Horgos of West Mifflin.
Cranberry Township Manager Jerry Andree released the following statement to Channel 11 News:
"The business decision recently announced by the Westinghouse Electric Company was not an unexpected step as they address their financial challenge. Westinghouse has a long history of successfully managing the challenges of the industries they serve. They are a resilient company with many talented employees serving a global demand for their expertise. There is every reason to believe they will overcome this current challenge and continue to be a leader in their field."
Carlow University accounting chair Mary Anne Basilone said the bankruptcy filing could be the start of a new beginning for the company, but it's a move that should put employees on notice that the future is unknown.
Basilone said news the filing starts a long process for the company, allowing it to reorganize and get itself moving in the right direction.
"It can really take years, but the plan has to be filed. They have ... in general, up to 18 months to have the plan available to be reviewed."
She said one way the company could reorganize is through layoffs.
"It's not imperative, but often times it's a reality. Expenses must be cut back on," Basilone said.
After the March 2011 nuclear disaster in Fukushima, costs of the business have ballooned because of growing safety concerns and regulations, and a souring of sentiment toward nuclear power in some countries, such as Germany.
Last year, Toshiba put Westinghouse’s value at $2.3 billion less than before.
Toshiba has been eager to get Westinghouse off its books to improve its plight, and it said it would do just that from this fiscal year. It has said earlier it wants to sell Westinghouse. Toshiba said Westinghouse had racked up debt of $9.8 billion.
Toshiba reiterated its view that at the root of the problem was the acquisition of U.S. nuclear construction company CB&I Stone and Webster.
Toshiba, which has been unable to report its financial results as required, postponing it into next month, said it would monitor the rehabilitation proceedings and disclose information as quickly as possible.
Its chairman has resigned to take responsibility for the company's troubles.
Auditors questioned Toshiba's latest reporting on the acquisition of CB&I Stone & Webster after a whistleblower, an employee at Westinghouse, wrote a letter to the Westinghouse president.
The company's reputation has also been tarnished in recent years by a scandal over the doctoring of accounting books to meet unrealistic profit targets.
The company has said it will no longer take on new reactor construction projects and will focus on maintaining the reactors it already has. But it is also involved in the decommissioning of the Fukushima Daiichi nuclear plant, which suffered multiple meltdowns after the March 2011 tsunami.
Toshiba has sold off so many parts of its once prized operations, such as computer chips and household appliances, it has little left but its infrastructure business.
Cox Media Group and The Associated Press