Toshiba has entered talks with Canadian asset manager Brookfield over the potential sale of its UK nuclear unit NuGen, which was slated to build the Moorside nuclear plant in Cumbria.
The talks, which are at an early stage according to two people directly familiar with the matter, come after Toshiba’s negotiations with Korea’s state-owned Korean Electric Power Corp have dragged on, with an exclusivity period ending in July.
Toshiba has been looking to offload NuGen as part of a wider restructuring in the wake of its financial crisis triggered by losses in its Westinghouse US nuclear business.
Brookfield bought Westinghouse from Toshiba for $4.6bn in January after the US nuclear business filed for Chapter 11 bankruptcy protection in 2017, making the Canadian company a likely candidate for the Japanese conglomerate to approach about the sale of its UK unit.
While Toshiba is continuing talks with Kepco, the deal had originally aimed to be completed by the middle of this year.
Toshiba declined to comment on the talks with Brookfield but said: “Toshiba continues to consider additional options including sale of its shares in NuGen to Kepco, and we are carefully monitoring the situation, in consultation with stakeholders including the UK government.”
No comments on the speculation
Brookfield said it did not comment on “speculation”.
The Department of Business, Energy and Industrial Strategy said that while nuclear has an important role to play in the UK’s energy future, the sale of NuGen “remains a commercial matter for Toshiba”.
In January when the Westinghouse deal was announced, Cyrus Madon, Brookfield’s chief executive, said it would “enhance the company’s position as a leading global infrastructure services provider to the power generation industry”.
A deal would give Brookfield a foothold in the UK, one of the few western nations backing the construction of new reactors.
Its purchase of Westinghouse has also given it a type of nuclear reactor — the AP1000 — which is one of only three already pre-approved by UK regulators for use in the country.
The deal between Toshiba and Kepco ran into problems after the UK announced in June that it was considering how the funding for new nuclear power plants should be structured.
Even though talks were advanced, Kepco has stalled making a final decision as it seeks to better understand what the UK policy will look like once it is finalised.
The most likely model under review by the UK is for private investors to secure a return on a nuclear plant’s so-called regulated asset base (RAB). That is designed to create public-private partnerships, with taxpayers shouldering a share of liabilities in the event of cost overruns.
Last week, NuGen announced it planned to cut its UK headcount from more than 100 to less than 40, removing all roles not directly related to managing its potential sale.