Credit rating downgrade for Moorside investor
CUMBRIAN new nuclear backer has been hit with new woes after agency Standard & Poor (S&P) downgraded its credit rating.
The embattled Japanese giant - which has a 60 per cent stake in NuGen, which has plans to build a power station in Moorside, near Sellafield - has been branded "increasingly unlikely" to meet its financial obligations.
This is likely to affect the way lenders deal with the company, which delayed reporting its financial results this week for the second time this year and faces the potential prospect of being delisted from the Tokyo Stock Exchange.
It is forecast to make a net loss of 390bn yen (£2.74bn) for the full year to March 31.
A spokesman for S&P said: "The downgrade this time reflects our view that absent unanticipated, significantly favourable changes in the issuer's circumstances, there is a growing likelihood that Toshiba will become unable to fulfill its financial obligations in a timely manner or will undertake a debt restructuring we classify as distressed in the next six months."
Toshiba's woes stem from part of its nuclear operations.
In January the company announced its US subsidiary, Westinghouse Electric, which was originally part of BNFL, may have overpaid - by several billion dollars - for another nuclear construction and services business.
This led the company to the review of its involvement in non-Japanese nuclear projects - including Moorside - and put its semiconductor business up for sale. It subsequently announced that it remained committed to the Cumbrian development - though it would not take on risk from construction - but the company's financial situation has fuelled fears over its involvement.
There have been rumours that Westinghouse may file for Chapter 11 bankruptcy in the US, Toshiba maintained it is "not aware" of this action being taken.
S&P though see it as a possibility.
The spokesman added: "The company (Toshiba) says it will review the status of its US nuclear power business, Westinghouse Electric, within the Toshiba group and will take steps to isolate risk in its overseas nuclear power business, including possibly deconsolidating Westinghouse by selling a majority stake in Westinghouse. However, specifics of any sale related to Westinghouse are unclear and we do not rule out the possibility that Westinghouse might file for Chapter 11 bankruptcy under US law.
"As the parent company, Toshiba is a guarantor for Westinghouse's external debt and, therefore, we see a growing likelihood that the risk of contingent liabilities will materialise in the future. These increased uncertainties lead us to believe pressure on Toshiba's funding ability and liquidity is likely to grow."