(MENAFN- Asia Times) Korea Electric Power Corp. has emerged as a potential buyer of the deficit-ridden Westinghouse nuclear business in the US owned by Japan's Toshiba Corp., people with direct knowledge of the matter said.
However, they cautioned that the scale of losses at Westinghouse are still unclear and the uncertainty of political backing in South Korea and the US to such an acquisition raise a number of major hurdles to any deal being completed.
Toshiba has estimated it will need to take a $6.3 billion writedown from cost overruns and project delays at Westinghouse and is reportedly considering a sale or a chapter 11 bankruptcy filing for the unit to allow it to restructure.
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State-controlled Kepco is one of few utilities with global nuclear ambitions as rivals such as Westinghouse and Areva in France have ran into delays with new reactor models, while the Fukushima nuclear disaster in Japan raised safety concerns worldwide.
Still, the Kepco utility is also heavily in debt and is in no rush on a Westinghouse approach until it gets a clear picture of the scale of the problems at the Toshiba unit, the people said.
Political vacuum
In addition, the impeachment of South Korea's president has created a power vacuum that will make it difficult to secure the required political backing for initiating such acquisition talks, said one of the officials.
The official added that such a deal involving an atomic power business would also need approval by the US government and delays in making appointments in the administration of President Donald Trump would further complicate any discussions.
Westinghouse is reportedly weighing its options, including filing for Chapter 11 protection from creditors — a move that could clarify matters for potential buyers.
Toshiba said this week any Chapter 11 filing would be a decision to be made by the Westinghouse board.
Industry experts say that carving out Westinghouse's profitable nuclear fuel and reactor services business and selling parts to another nuclear group would be easier than trying to sell all of Westinghouse, including its liabilities.
But it could take years to set up the complex legal structures needed for this and to get the green light from creditors and regulators.
In France, a government-led recapitalisation and restructuring of Areva's reactor business followed a series of a major stumbles and cost overruns at the company.
The French plan was agreed in July 2015, after months of negotiations. Nearly two years on, it still hasn't been concluded.
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