The difficult economics of commercial nuclear power may soon bring down “one of Japan’s historic corporations,” the Washington Post reported, after Toshiba’s chairman abruptly resigned amid swirling rumours of the company’s impending bankruptcy.
“Toshiba, which makes everything from televisions to nuclear reactors, has had a rocky few years,” the Post reports. “In 2015, it was discovered to have exaggerated its profits, leading to wide-ranging restructuring and asset sales.”
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However, it’s the radioactive quality of the company’s decade-old venture into nuclear power generation that may be about to bring down the 79-year-old enterprise, born in 1938 from the merger of two even older companies. “The chaos at Toshiba deepened” on Tuesday, the paper notes, with the abrupt resignation of its chairman, Shigenori Shiga, who had led its nuclear push.
“Analysts are now speculating about the possibility that Toshiba, which employs almost 200,000 people in Japan and has significant investments in the United States, will have to file for bankruptcy.”
Toshiba was the poster child for the global nuclear industry’s deep woes in a recent industry assessment by Jim Green, national nuclear campaigner with Friends of the Earth Australia.
On Tuesday, the Post reports, “Toshiba executives were due to deliver the company’s quarterly earnings announcement—but failed to show up.” The company’s shares promptly dropped 8% on Japanese markets. After the close of trading, “Toshiba that it would take a US$6.3-billion hit related to [its subsidiary] Westinghouse’s acquisition in December of Stone & Webster, a nuclear construction business.”
Toshiba acquired a majority stake in Westinghouse in 2006, but now appears to be having second thoughts about that purchase, as well. The company “said it had received internal information late last month about irregularities during the acquisition,” the Post writes. “It had learned that controls at Westinghouse had been ‘insufficient’ and that the company had used ‘inappropriate pressure’ to make the acquisition.”
The departed Chairman Shiga had been brought into the mother company’s top job from its Westinghouse division, Reuters reports.
The company’s market capitalization has fallen by nearly half, to US$8 billion, in recent weeks, the Washington Post adds. Japan’s “Nikkei business newspaper, which has a record of eerily precise leaks from Japanese companies, had earlier reported that Toshiba would say it faced ‘material uncertainty’ about its prospects for remaining in business” at the cancelled briefing. Instead, the company merely delayed its financial report for a month.
Toshiba’s failure would be major blow to Japan’s business “face”—or honour. “This is one of Japan’s historic corporations, and it’s very important to the Japanese economy,” Tokyo-based energy analyst Tom O’Sullivan told the Post. “So this could be very significant for Japan. It would even impact Japan’s sovereign credit rating if there’s a knock-on effect.”