* KEPCO one of few firms with global nuclear ambitions
* But won't rush to bid for Toshiba business - sources
* Would want clarity on Westinghouse liabilities
* U.S., Korean political uncertainty not helping
By Jane Chung and Geert De Clercq
SEOUL/PARIS, March 24 South Korea's KEPCO
, the likeliest suitor for Toshiba Corp's
troubled nuclear business, is holding off from making an
approach because of question marks over the scale of damage at
the unit and political uncertainty in both South Korea and the
United States, people with direct knowledge of the matter say.
Japanese TV-to-rail conglomerate Toshiba has been battered
by a $6.3 billion hit from overruns in the nuclear business and
has widened a probe into governance failures at its U.S.-based
unit, Westinghouse. It is now considering a sale.
State-controlled Korea Electric Power Corp (KEPCO), one of
few utilities with global nuclear ambitions, has developed its
own technology and led a consortium in 2009 that won a contract
to build four reactors in the United Arab Emirates.
Unlike Westinghouse and France's Areva, whose new
third-generation reactor models have faced years of delays and
big cost overruns, KEPCO has managed to build its reactors
abroad on time and to budget.
This positions the Korean firm as a major new player in
nuclear reactor manufacturing at a time when Westinghouse and
Areva, the two leading OECD nuclear firms, are struggling.
KEPCO aims to build six more reactors abroad by 2025,
targeting markets like Britain and South Africa.
But the utility, still heavily indebted, is in no rush to
acquire Toshiba's business, the people said, as it needs clarity
on the potential Westinghouse baggage - in terms of liabilities,
but also intellectual property.
That could mean months, or even years, of waiting, one said.
More pressingly, domestic uncertainty after the impeachment
of South Korea's president has made it tougher to secure
political backing for a risky nuclear deal.
One official involved in the matter said KEPCO and Korea
Hydro & Nuclear Power Corp (KHNP) could not move without state
support: "The project has a chance of backfiring on us as
everything is unpredictable, so it's a hot potato."
And in the United States, there is little clarity over
nuclear policy under President Donald Trump, and several key
positions are vacant.
One senior industry source said any move by KEPCO could
require pre-approval by the U.S. government - complex even if
South Korea is likely one of few palatable options.
"Without key (U.S.) appointments, the question is to what
extent it can be discussed," one of the sources said, adding
that any deal for Westinghouse would have to be discussed at
KEPCO said earlier this week it was in talks to buy a stake
in the Toshiba-Engie British nuclear joint venture NuGen, but on
Westinghouse it has said only that it would consider the option.
Yet KEPCO has been widely seen in the industry as the
potential winner from woes at Westinghouse, which is struggling
to recover from crippling cost overruns at two U.S. projects and
the ill-fated purchase of a nuclear plant construction firm.
Parent Toshiba is probing the unit after a whistleblower
accused some managers of exerting "inappropriate pressure".
Westinghouse is weighing its options, including filing for
Chapter 11 protection from creditors - a move that could clarify
matters for potential buyers, but will also mean a lengthy
process that could last years, as with French utility EDF's
takeover of Areva's reactor business.
Under a government-led recapitalization and restructuring of
Areva, the French state is effectively nationalizing Areva's
liabilities related to a troubled reactor new-build project in
Olkiluoto, Finland and to the manufacturing problems and
falsifications at Areva's foundry unit Creusot Forge.
Ring-fencing Areva's liabilities will allow EDF, one of the
main customers, to buy the healthy reactor construction and
services business, while Areva’s nuclear fuel business has been
split off in a separate business unit.
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.
The Areva-EDF deal was agreed in July 2015, after months of
negotiations. Nearly two years later, it is still not finalised.
(Reporting by Jane Chung in SEOUL and Geert De Clercq in PARIS;
Writing by Clara Ferreira Marques; Editing by Ian Geoghegan)