TOKYO -- Toshiba will buy back a 10% stake in Westinghouse Electric for about 59 billion yen ($522 million), the Japanese conglomerate said Tuesday, under an option exercised by the Kazakh state-run nuclear power company that bought the shares a decade ago.
In a notice dated Monday, Kazatomprom told Toshiba it will exercise a put option allowing the state-run business to sell the stake back to the Japanese company as of Oct. 1. The transaction is to take place Jan. 1.
Westinghouse has been working on its rehabilitation since filing for U.S. Chapter 11 bankruptcy protection in March. Though the buyback will give Toshiba 100% ownership of Westinghouse, the American nuclear company is not counted as a subsidiary under the terms of Chapter 11.
Toshiba, which expected Kazatomprom to exercise the option, has factored the financial impact into its earnings projections for the fiscal year ending in March.
Toshiba originally sold the Westinghouse shares as part of its global strategy on nuclear power. Kazakhstan has one of the world's largest uranium reserves. Toshiba in August 2007 acquired a stake in a uranium mine there developed by Kazatomprom. The Japanese company envisioned becoming involved in every stage of nuclear power production from obtaining fuel to plant construction.
Japan's government backed these efforts in hopes of boosting exports of nuclear power plants. Then-economic minister Akira Amari visited Kazakhstan in April 2007, where he inked a joint statement on greater uranium exports and other areas for cooperation. Atsutoshi Nishida, who was then president of Toshiba, accompanied Amari on the trip, where he had discussed the initial sale of Westinghouse shares with Kazatomprom.
But the nuclear power boom has since subsided, and industry players face a huge shift. After news broke in December that Westinghouse faced massive losses over the construction of nuclear plants, Toshiba has worked to take the U.S. company off its books and to focus instead on the domestic market for its nuclear business. Westinghouse is seeking another sponsor to assist with its rehabilitation.
Toshiba intends to maintain its partnership with Kazatomprom, but apparently has already written down its stake in the uranium mine.