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Toshiba's Westinghouse Electric files for Chapter 11 bankruptcy

Westinghouse Electric Co. LLC and certain of its subsidiaries and affiliates have filed voluntary Chapter 11 bankruptcy petitions in the U.S. Bankruptcy Court for the Southern District of New York, according to a March 29 release.

The troubled Toshiba Corp. unit is seeking to undertake a strategic restructuring as a result of certain financial and construction challenges in its U.S. AP1000 power plant projects. Westinghouse's operations in its Asia and Europe, the Middle East and Africa regions are not impacted by the Chapter 11 filings.

The Japanese conglomerate has Westinghouse-related debt obligations of $9.8 billion as of Dec. 31, 2016.

Toshiba began exploring the Chapter 11 bankruptcy option for Westinghouse in February after incurring $6.3 billion of losses, which it said stemmed largely from construction cost overruns and schedule slippage of two nuclear expansion projects at V.C. Summer in Jenkinsville, S.C., and at Alvin W. Vogtle near Waynesboro, Ga.

Westinghouse Electric has secured $800 million debtor-in-possession financing facility from a third-party lender, of which Toshiba will provide $200 million as a backstop guarantee. The financing will fund Westinghouse's core businesses of supporting operating plants, nuclear fuel and components manufacturing and engineering as well as decommissioning, decontamination, remediation and waste management.

"We are focused on developing a plan of reorganization to emerge from Chapter 11 as a stronger company while continuing to be a global nuclear technology leader," Interim President and CEO José Emeterio Gutiérrez said in the release.

Westinghouse also filed first-day motions to ensure business continuity through payment of employee salaries, wages and benefits, as well as pay its suppliers for the delivery of services.

The company is represented by Weil Gotshal & Manges LLP in its Chapter 11 cases.

Meanwhile, the owners of V.C. Summer nuclear power project reached an agreement with Westinghouse Electric that calls for continued work on the nuclear expansion project. SCANA Corp. and the South Carolina Public Service Authority will file the agreement with the court as part of Westinghouse bankruptcy filings today. The agreement also provides for a transition and evaluation period during which the owners will determine the most prudent path forward for the project.

"This agreement with Westinghouse allows progress to continue to be made on-site while we evaluate the most prudent path to take going forward," said SCANA Chairman and CEO, Kevin Marsh.

SCANA will hold a conference call with analysts at 3 p.m. ET today to provide an update on the impact of Westinghouse Electric's bankruptcy on the V.C. Summer nuclear project.