News Archive


Huge nuclear cost overruns push Toshiba’s Westinghouse into bankruptcy


WILMINGTON, DEL./TOKYO Westinghouse Electric Co, a unit of Japanese conglomerate Toshiba Corp (6502.T), filed for bankruptcy on Wednesday, hit by billions of dollars of cost overruns at four nuclear reactors under construction in the U.S. Southeast.

The bankruptcy casts doubt on the future of the first new U.S. nuclear power plants in three decades, which were scheduled to begin producing power as soon as this week, but are now years behind schedule.

The four reactors are part of two projects known as V.C. Summer in South Carolina, which is majority owned by SCANA Corp (SCG.N), and Vogtle in Georgia, which is owned by a group of utilities led by Southern Co (SO.N).

Costs for the projects have soared due to increased safety demands by U.S. regulators, and also due to significantly higher-than-anticipated costs for labor, equipment and components.

Pittsburgh-based Westinghouse said it hopes to use bankruptcy to isolate and reorganize around its “very profitable” nuclear fuel and power plant servicing businesses from its money-losing construction operation.

Westinghouse said in a court filing it has secured $800 million in financing from Apollo Investment Corp (AINV.O), an affiliate of Apollo Global Management (APO.N), to fund its core businesses during its reorganization.

For Toshiba, the filing will help keep the crisis-hit parent company afloat as it lines up buyers for its memory chip business, which could fetch $18 billion. Toshiba said Westinghouse-related liabilities totalled $9.8 billion as of December.

Toshiba said it would guarantee up to $200 million of the financing for Westinghouse. Toshiba shares closed up 2.2 percent but have lost half their value since the nuclear problems surfaced late last year.

The Apollo loan needs court approval and is expected to carry Westinghouse for a year, people familiar with the matter said. The funds would support the company’s global operations, including its healthier services and maintenance businesses, and pay for construction workers on site in Georgia and South Carolina, the people said.

However, the money cannot be used to repay the liabilities stemming from cost overruns and delays at the projects, the people said.

SCANA told investors on a conference call on Wednesday that 5,000 workers would continue working on its South Carolina site for 30 days while the company weighed options.

“Our preferred option is to finish the plants. The least preferred option is abandonment,” said SCANA CEO Kevin Marsh.

Southern Co said in a statement it would hold Westinghouse and Toshiba accountable for its contract.

State regulators have approved costs of around $14 billion for each project but Morgan Stanley has estimated the final bill of around $22 billion for the South Carolina project and around $19 billion for the Georgia plant.

POSSIBLE SALE

Westinghouse’s nuclear services business is expected to continue to perform profitably over the course of the bankruptcy and eventually be sold by Toshiba, people familiar with the matter said. They cautioned that the sale process will likely be highly complex and litigious.

The bankruptcy could embroil the U.S. and Japanese governments, given the scale of the collapse and the $8.3 billion in U.S. government loan guarantees that were provided to help finance the reactors.

The U.S. Department of Energy expects the parties to honor their commitments, said spokeswoman Lindsey Geisler.

The Nuclear Regulatory Commission said it was inspecting the sites to ensure the facilities met the requirements of the licenses that were issued to units of Southern and SCANA.

Shares of SCANA were down 0.8 percent at $65.64 and Southern Co fell 0.4 percent to $49.90 in trading on the New York Stock Exchange.

NUCLEAR RENAISSANCE

When regulators in Georgia and South Carolina approved the construction of Westinghouse’s AP1000 reactors in 2009, it was meant to be the start of renewed push to develop U.S. nuclear power.

However, a flood of cheap natural gas from shale, the lack of U.S. legislation to curb carbon emissions and the 2011 Fukushima nuclear accident in Japan dampened enthusiasm for nuclear power.

Toshiba had acquired Westinghouse in 2006 for $5.4 billion. It expected to build dozens of its new AP1000 reactors – which were hailed as safer, quicker to construct and more compact – creating a pipeline of work for its maintenance division.

NUCLEAR FALLOUT

Toshiba has said it expects to book a net loss of 1 trillion yen ($9 billion) for the fiscal year that ends Friday, one of the biggest annual losses in Japanese corporate history. Toshiba had earlier forecast a loss of 390 billion yen.

Toshiba will close the first round of bids for its chip business – the world’s second-biggest NAND chip producer – on Wednesday. A source with knowledge of the issue said that about 10 potential bidders had shown interest, including Western Digital Corp (WDC.O) which operates a Japanese chip plant with Toshiba, rival Micron Technology Inc (MU.O), South Korean chipmaker SK Hynix Inc (000660.KS) and financial investors.

Toshiba CEO Satoshi Tsunakawa said offers for the unit are likely to allow Toshiba to maintain shareholder equity. Toshiba believes the unit will be worth at least 2 trillion yen ($18 billion), he added.

The government-backed Innovation Network Corporation of Japan, and Development Bank of Japan are expected to enter later bidding rounds as part of a consortium, sources said.

A separate source said that Foxconn (2317.TW), the world’s largest contract electronics manufacturer, is expected to place an offer which is likely to be the highest bid. Other sources have said the Japanese government is likely to block a sale to Foxconn due to its deep ties with China.

(Reporting by Makiko Yamazaki and Tim Kelly in Tokyo and Tom Hals in Wilmington, Delaware; Additional reporting by Kentaro Hamada, Yoshiyasu Shida, Taiga Uranaka, Hitoshi Ishida and Sam Nussey in Tokyo, Scott DiSavino and Jessica DiNapoli in New York, Tracy Rucinski in Chicago; Writing by Naomi Tajitsu and Clara Ferreira Marques; Editing by Noeleen Walder, Edwina Gibbs, Bernard Orr and Lisa Shumaker)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/MkthVmqZBI4/us-toshiba-accounting-board-idUSKBN17006K

Clouds over Trump tax plan may curb appetite for U.S. stocks


NEW YORK Wall Street has tempered its expectations for sweeping U.S. tax cuts in the wake of President Donald Trump’s stinging healthcare defeat, a move that could push investors to embrace cheaper global stocks after the heady U.S. rally of recent months.

The White House turned its attention to an overhaul of the tax code after Republicans were forced on Friday to pull legislation that would have begun dismantling the Obama administration’s 2010 healthcare law.

Trump made tax cuts, including a lowering of the rates paid by corporations, a pillar of his 2016 presidential campaign. His Nov. 8 victory whetted the appetite of business and investors who saw passage of a tax bill as a virtual slam dunk.

But the Republican infighting that doomed the healthcare bill in the House of Representatives and the evaporation of the savings that it was seen generating have made the endeavor more problematic.

“Now it appears some of the initiatives in the tax bill will have to be scaled back or even eliminated,” said Robert Willens, an independent tax analyst. “It clearly has to be less ambitious.”

Others are even less optimistic.

“Getting corporate tax relief done in 2017 has gone from a decent chance to remote,” said Michael Purves, chief global strategist at Weeden Co. “That’s a huge contributor to potential earnings.”

Economists at investment bank Goldman Sachs see “some downside risk” to their original expectation for a tax cut of around $1.75 trillion over 10 years, though they still see a deal passing.

Trump has said he wants to cut corporate taxes to a range of 15 percent to 20 percent, from 35 percent.

A watered-down version of his tax goals could rattle the concern among money managers that U.S. equities’ valuations are stretched.

Analysts expect SP 500 profit growth of 11 percent this year according to Thomson Reuters data – with many analysts not yet baking a tax cut into that estimate – a big increase over 1.4 percent growth in 2016.

“What (the healthcare bill failure) does in my mind is further emphasize the case for international and emerging market equities,” said Jack Ablin, chief investment officer at BMO Private Bank.

‘SUBSTANTIALLY OVERVALUED’

On a forward price-to-earnings basis, the U.S. market is around the most expensive it has been in years compared with the United Kingdom, Europe and emerging markets. Against Japan, it is at its most expensive in at least six months.

Investors in U.S. stocks are paying almost $18 for every dollar expected in earnings over the next 12 months, compared with just above $14 for stocks on the London, Tokyo and European exchanges, and near $12 for those on emerging market exchanges.

More upside is seen in European markets this year. Reuters polls on Wednesday predicted a gain of under 3 percent in U.S. stocks between now and the end of the year versus a rise of between about 5 percent and 6 percent for the STOXX 600. and Euro STOXX 50 .STOXX50E.

“Making an argument for Europe over the U.S. is very easy at this point,” said Matt Burdett, a portfolio manager at Thornburg Investment Management, which has $49 billion in assets under management.

Dave Wright, a co-portfolio manager of the Sierra Strategic Income fund, which manages $2.3 billion in assets, said the U.S. market looks “substantially overvalued.”

Reflecting the growing appetite U.S. investors have for overseas assets, U.S.-based European stock funds attracted $636 million over the latest week ended March 22, the largest inflows since December 2015, according to Lipper data.

The four-week moving average of inflows for these funds totaled $328 million in the latest week, the highest amount since January 2016. For the same period, U.S.-based equity funds posted net cash withdrawals of more than $1 billion, Lipper data showed.

Still, investors are unlikely to bail out of U.S. equities based on the fate of the Trump tax plan alone.

Jason Ware, chief investment officer at Albion Financial Group, said “whether or not they hit 20 percent corporate tax rate or 25 percent is immaterial when you look at the big picture.”    

(Additional reporting by Jennifer Ablan and Rodrigo Campos, Chuck Mikolajczak and Caroline Valetkevich; Editing by Paul Simao)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/2pgXlox6zfI/us-usa-tax-stocks-analysis-idUSKBN170306

U.S. pending home sales surge to ten-month high ahead of spring


WASHINGTON Contracts to buy previously owned U.S. homes jumped to a 10-month high in February, pointing to robust demand for housing ahead of the busy spring selling season.

The report on Wednesday from the National Association of Realtors suggested higher home prices and mortgage rates were having little impact on the housing market for now, underscoring the economy’s resilience despite an apparent slowdown in growth in the first quarter.

The NAR said its Pending Home Sales Index, based on contracts signed last month, surged 5.5 percent to 112.3. That was the highest reading since April and the second best showing since May 2006.

“This bodes well for home sales this spring,” said Misa Batcheller, an economic analyst at Wells Fargo Securities in Charlotte, North Carolina.

Contract signing last month was likely boosted by unseasonably warm temperatures. The gains reversed January’s 2.8 percent drop. Pending home contracts become sales after a month or two, and last month’s surge implied a pickup in home resales after they tumbled 3.7 percent in February.

Economists had forecast pending home sales rising 2.4 percent last month. Pending home sales increased 2.6 percent from a year ago.

U.S. financial markets were little moved by the data as investors assessed comments from Federal Reserve officials on further interest rate increases this year. Chicago Fed President Charles Evans, one of the U.S. central bank’s most consistent supporters of low interest rates, said he supported additional monetary policy tightening this year.

The Fed raised its benchmark overnight interest rate by a quarter percentage point earlier this month and has forecast two more rate hikes this year. The dollar was trading higher against a basket of currencies while U.S. stocks were mixed. U.S. government bond prices rose.

TIGHT INVENTORIES

Demand for housing is being driven by a strong labor market, which is generating wage increases, as it nears full employment. Sales activity, however, remains constrained by tight inventories, which are driving up home prices.

“The good news is that warm winter weather has led to a surge in construction that will hopefully result in a bloom of new homes for sale this spring,” said Joseph Kirchner, senior economist at realtor.com.

A report on Tuesday showed home prices increased 5.7 percent in January on a year-on-year basis. The NAR expects sales of previously owned homes to increase 2.3 percent this year to around 5.57 million units.

Existing homes sales increased 3.8 percent last year. Housing market strength suggests an apparent sharp slowdown in economic growth early in the first quarter is likely temporary.

The Atlanta Fed is forecasting gross domestic product increasing at a 1.0 percent annualized pace in the first quarter. The economy grew at a 1.9 percent rate in the final three months of 2016.

Given labor market strength, economists expect only a modest impact from higher mortgage rates. The 30-year fixed mortgage rate is currently at 4.23 percent, below a more than 2-1/2-year high of 4.32 percent hit in December.

In a separate report on Wednesday, the Mortgage Bankers Association said applications for home purchase loans rose 1.2 percent last week from the prior week. It was the fourth increase in the past five weeks.

Last month, pending sales of existing homes increased 3.4 percent in the Northeast and jumped 3.1 percent in the West. Contracts surged 11.4 percent in the Midwest and rose 4.3 percent in the South.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/qoVAKZ1V-X0/us-usa-economy-idUSKBN1701XS

Banks to London staff: no panic as Britain launches EU divorce process


LONDON Banks in Britain have tried to reassure their London staff over possible Brexit disruption, including a shift in jobs to continental Europe, as Prime Minister Theresa May triggered formal EU divorce proceedings on Wednesday.

Investment banks Goldman Sachs, JPMorgan Chase and Nomura were among those who sent messages to employees in London, Europe’s biggest financial center, as they work out how to keep serving clients across the European Union after Britain leaves the bloc.

Morgan Stanley also informed employees in Europe that no decisions had yet been made on changes for when Britain departs, leaving the EU with 27 member states.

But Rob Rooney, CEO of Morgan Stanley International, was blunter in updating them on the work of a committee comprising senior leaders at the bank which has been making Brexit contingency plans for over a year.

“As prudence would dictate, we have been preparing for a worst case scenario, in which we would need to establish a more significant entity within the EU 27,” Rooney said in a memo to staff on Wednesday seen by Reuters.

“We continue to monitor the situation closely and, when appropriate, will take the necessary decisions and begin to execute on our plans.”

JPMorgan Chase said in an internal memo that it has spent the last few months reviewing its options. “While our objective in the short term is to limit the number of staff moves, there will inevitably be some staff who will be asked to consider relocation,” the bank said.

Richard Gnodde, CEO of the European arm of Goldman Sachs, stressed that no big changes were imminent even though he said last week that the Wall Street bank would begin by moving hundreds of staff as part of its “contingency plans” for Brexit.

“All of this work leads us to conclude that although Brexit may well bring some changes to our footprint, a lot will continue to operate as it does today,” he said in a voicemail sent to all London employees’ phones last Friday.

May’s formal notification of Britain’s intention to leave the EU starts two years of negotiations allowed under the bloc’s treaty that will shape the future of the country and Europe, as well as London’s place as a global financial center.

Gnodde said Goldman Sachs could make long-term decisions only after those negotiations were complete.

“We also understand that you will have many questions regarding the implications of Brexit,” he said. “We are sensitive to those concerns, and want you to know that we will share any information on changes that will impact our European footprint as quickly as we can.”

May has said Britain will not try to remain in the EU’s single market, meaning London-based financial services companies would not be able to sell to clients in the remaining 27 member states in practical terms, unless a special deal were struck.

Fearing they could lose top-performing staff, banks are treading carefully as they contemplate moving London-based workers to continental centers such as Frankfurt, Paris and Luxembourg, or paying them off and hiring employees locally.

Nomura of Japan said in a message to staff on Wednesday that although it had been actively planning for Brexit, no final decision had been made on either location or timing of any new European entity, according to a source familiar with the matter.

TWO-STAGE PLAN

Banks are enacting two-stage contingency plans for Brexit. The first involves relatively small numbers of jobs to make sure the requisite licenses, technology and infrastructure are in place, while the next requires longer-term thinking on what their European business will look like in the future. This is when bigger moves might take place.

The British Bankers’ Association and the City of London Corporation, which runs the financial district, said in statements it is crucial that after the conclusion of the talks banks retain as much access to the single market as possible.

They both also said that Britain should announce a staggered departure from the EU that would allow British-based banks to prevent market disruption.

Regulatory and banking experts working for the City of London and lobby group TheCityUK are drawing up proposals for a ‘mutual recognition’ system.

Under this, the EU and Britain would broadly accept firms in each other’s financial markets because their home regulatory systems apply similar standards. The aim is for London-based banks to keep serving continental clients, although skeptics say mutual recognition is largely untested globally and would struggle to win approval within the EU.

(Editing by Susan Fenton and David Stamp)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/TBsuonh-f-U/us-britain-eu-banks-idUSKBN1700YA

EU vetos Deutsche Boerse-London Stock Exchange merger deal


BRUSSELS An attempted merger between the German and British stock exchanges was struck down by European regulators on Wednesday, formally ending a deal that unraveled in the wake of Britain’s vote to leave the European Union.

“We could not approve this merger on the terms … proposed,” said European Competition Commissioner Margrethe Vestager, blocking the 29 billion-euro ($31 billion) deal to combine Deutsche Boerse (DB1Gn.DE) and the London Stock Exchange (LSE.L).

A merger would have created Europe’s biggest stock exchange. But the European Commission objected, saying the deal, which was the pair’s fifth attempt to combine, would have resulted in a monopoly in the processing of bond trades.

Selling MTS, the LSE’s Italian fixed income trading platform, would have removed the Commission’s concerns but LSE declined to do so.

“How exactly these markets work and the products traded can seem like rocket science,” said Vestager. “But actually our competition concerns with this merger are very simple.”

“In some markets Deutsche Börse and London Stock Exchange both provide the same services. And in some of these markets they are essentially the only players and the merger would therefore have led to a de facto monopoly.”

The EU rejection comes on the day the British government started proceedings for leaving the European Union, a move which industry sources have said undermined the merger plans.

The Brexit decision had prompted German politicians to demand that the headquarters of the exchange group move from London to Frankfurt, creating a conflict that caused the deal to unravel.

Further complicating the picture, German police and prosecutors had opened an investigation into possible insider trading by Deutsche Boerse Chief Executive Carsten Kengeter, the man who was set to lead the combined group.

“It is always the same,” said one Deutsche Boerse manager, commenting on the long saga of the two exchanges trying to join together. “Attempt to merge. Fall on your face. Save up money. Next merger attempt. Fall on your face,” he said.

While Wednesday’s announcement marks the official end of the deal, there was already no hope left that it would go ahead after the LSE took the unusual step last month of saying it would not accede to EU demands that MTS had to be sold if the deal was to be approved.

Shares in the LSE were up 2 percent at 3,085 pence by 1130 GMT on Wednesday, after it announced a share buyback, while shares in Deutsche Boerse were up 1.7 percent at 83.23 euros.

POWER STRUGGLE

The proposed merger threw a spotlight on clearing, whereby stock, bond and derivatives trades are completed, even if one side of the deal goes bust.

The LSE’s clearing arm, LCH, is one of the world’s biggest, and the exchange had agreed to sell its LCH’s Paris arm to French bourse Euronext if the merger went ahead. That sale will now not happen, the LSE said.

This presents a problem for Euronext, which had opposed the tie up of London and Frankfurt, because it uses LCH in Paris to clear its own share trades under a deal that expires next year.

Euronext Chief Executive Stephane Boujnah said on Wednesday that it was still willing to buy the business.

“But in the absence of obtaining an agreement, Euronext is fully committed to securing the best long-term solution for its post-trade activities,” Boujnah said.

LCH in London dominates the clearing of euro-denominated derivatives, an activity some EU policymakers want shifted to the euro zone to come under the supervision of the European Central Bank because Britain is leaving the EU.

The bourse merger could have helped by shifting euro clearing to Deutsche Boerse’s Eurex arm in Frankfurt. The collapse of the deal may now prompt the European Union to take action to engineer such a shift.

(Additional reporting by Huw Jones in London and Andreas Kroener in Frankfurt; Writing by John O’Donnell; editing by Philip Blenkinsop, Greg Mahlich)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/KFU_8c-d4rY/us-lse-m-a-deutsche-boerse-eu-idUSKBN1700XG

VW files complaint at Munich court against dieselgate firm searches


BERLIN Volkswagen (VOWG_p.DE) has filed a legal complaint with a Munich court against the searches carried out by German prosecutors against the law firm it hired to investigate its emissions scandal, a spokesman said.

Europe’s biggest carmaker had condemned the search of offices of U.S. law firm Jones Day on March 15 and said it would use every legal step to defend itself.


The VW spokesman declined comment on Wednesday when the complaint was lodged with the Munich local court and gave no further details.

(Reporting by Andreas Cremer; Editing by Christoph Steitz)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/zm1IldHBWMY/us-volkswagen-emissions-court-idUSKBN1701IB

EU rapid drug approval plan worries some national agencies


FRANKFURT A push by the European Medicines Agency to speed up the approval of new drugs that show promise is running into resistance from some of the national agencies that will ultimately decide whether the medicines are worth buying.

Pharmaceutical companies, patient advocacy groups and lawmakers around the world are pushing regulators to cut through what they see as red tape and adopt more streamlined approval processes for new drugs.

Europe has been looking at new approaches to drug testing for several years and the issue came to the fore again in January after U.S. President Donald Trump vowed to accelerate approvals to get new drugs to patients faster.

However, critics of new approaches, such as lowering the requirements for lengthy clinical trials, worry that selling drugs with relatively little testing data, even if the go-ahead comes with strict limits, will expose patients to greater risks.

The independent authority in Germany (IQWiG) that evaluates new drugs and plays a key role in what price health services pay for them has been one of the most vocal opponents of such new approaches within Europe.

Given Germany is Europe’s biggest drugs market and the fourth in the world, its misgivings risk hurting a broader drive to bring new treatments to patients faster, not least because drug companies may conclude that dealing with price-setting authorities country-by-country ends up being too costly.

“Accelerated approval on the basis of reduced data should be limited to special situations. But there is reasonable concern that it is intended to become the norm,” said Stefan Lange, the deputy director of Germany’s Institute for Quality and Efficiency in Health Care (IQWiG).

The agency has in the past rejected pivotal studies that had convinced the EMA to approve a drug, saying they were not statistically valid. This has resulted in some drugs not getting launched in Germany, or being withdrawn soon after their launch.

REAL-WORLD DATA

The push to adapt the approval process is partly the result of advances in genetics that are yielding previously unknown treatments for serious conditions and new tools that can forecast better which patients can be helped, and which cannot.

Europe’s drug licensing authority, the European Medicines Agency (EMA), has been pursuing a new approach to testing known as “adaptive pathways” for experimental drugs against serious, hard-to-treat conditions. It picked six drugs under development for a pilot scheme that ran from March 2014 to August 2016.

Two of the drugs were for rare cancers, two for hereditary blood diseases, one for a fungal infection and one for heart problems. The companies included U.S. biotech firm Bluebird Bio Inc (BLUE.O), Israel’s Pluristem Therapeutics Inc (PSTI.O) and unlisted British firms Immunocore Ltd and F2G Ltd.

One of the most contested methods advocated by the adaptive pathways approach is to bring the launch of a promising drug forward on a provisional basis, and then gather some of the evidence about its effectiveness and side effects in an everyday medical setting, known as the use of “real-world evidence”.

Under established randomized controlled trials (RCT), new drugs are given to some participants while a standard treatment or placebo is given to a randomly assigned control group, with the results determining whether the medicine gets approved.

Typically, neither group in the trial knows whether it is getting the new treatment or not.

The new approach is to gather data from patients being treated, using new medical sensors, smartphone apps and data processing tools. Depending on the outcome of the real-world trial phase, the group of patients eligible for the drug could be narrowed down or widened for permanent approval.

This approach appeals to patient advocacy groups such as Eurordis for rare diseases, or the European Cancer Patient Coalition, which has called for more faith in real-world data and letting patients decide whether they want to take the risk.

“BOUND TO FAIL”

Germany’s IQWiG argues that reducing the role of randomized trials goes against the scientific principles that are needed to get clear results on the risks and benefits of a new treatment.

IQWiG’s Lange said relying on real-world evidence would mean experimental research, with all its risks of side effects, would be moving into the “uncontrolled environment” of everyday medical care – and that could only be justified if the early signs of a drug’s therapeutic benefits were truly dramatic.

Linked to this is the problem that once a treatment gets even a provisional green light, it would be hard to conduct a randomized trial simply because it would be unethical to arbitrarily deny some patients an approved treatment.

Attempts to preserve comparison benchmarks for real-world evidence projects include drawing on data from patients still taking older treatments elsewhere.

IQWiG argues that any factors playing a role in the composition of study groups would skew the findings. “Any attempt to statistically eliminate the distortions from these selection mechanisms afterwards is bound to fail,” said Lange.

France is another country to voice scepticism about the EMA’s new approach and some smaller countries have expressed misgivings privately. France’s Haute Autorite de Sante, for example, says it has “mixed feelings” about expanding existing conditional marketing approval rules, according to Chantal Belorgey, its director in charge of medical assessment.

But Britain’s National Institute for Health and Care Excellence (NICE) said it supported the adaptive pathways concept and was exploring how different sources of evidence could supplement data from randomized trials.

The EMA’s Senior Medical Officer Hans-Georg Eichler also says the advent of precision drugs which would only be used by small groups of patients has added urgency to the quest for new sources of evidence to complement the established trial route.

Researchers are splitting medical conditions such as cancer or neurodegenerative diseases into ever smaller sub-groups as they learn to parse through the multitude of genetic traits that fuel a disease. But that is leading to smaller drug trials, making it difficult to produce statistically reliable results.

The EMA is now taking stock of the conflicting views about its pilot scheme from the national cost-effectiveness watchdogs, patients and organizations that pay for healthcare.

In the meantime, the companies involved in the pilot are continuing to receive scientific advice from the EMA and the scheme is open to new applicants, a spokeswoman said.

(Additional reporting by Matthias Blamont in Paris; editing by David Clarke)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/umrPq_qQhOo/us-pharmaceuticals-europe-regulators-ana-idUSKBN1701E3

After crippling cost overruns, Toshiba’s Westinghouse files for bankruptcy


TOKYO Toshiba Corp’s (6502.T) U.S. nuclear unit Westinghouse filed for Chapter 11 protection from creditors on Wednesday, just three months after huge cost overruns were flagged, as the Japanese parent seeks to limit losses that threaten its future.

Bankruptcy will allow Pittsburgh-based Westinghouse, once central to Toshiba’s diversification push, to renegotiate or even break its construction contracts, though the utilities that own the projects could seek damages. It could even pave the way for a sale of all or part of the business.

For Toshiba, the aim is to fence off soaring liabilities and keep the group afloat. Toshiba said Westinghouse-related liabilities totaled $9.8 billion as of December, making it one of the industry’s most costly collapses to date; it had earlier estimated writedowns would swell to $6.3 billion.

Toshiba said that as a result it expected to book a net loss of 1 trillion yen ($9 billion) for the year ending in March, up from an earlier loss forecast of 390 billion and one of the biggest annual losses for a Japanese company ever.

Westinghouse’s bankruptcy, the latest financial debacle to buffet corporate Japan, comes on top of a separate 2015 accounting scandal for Toshiba. To cover upcoming losses, it has put its prized memory chip unit up for sale.

“Toshiba concluded that a Chapter 11 filing was essential to rebuild Westinghouse,” Toshiba CEO Satoshi Tsunakawa said at a news briefing in Tokyo.

The filing will now trigger complex negotiations between the Japanese conglomerate, its unit and creditors, and could embroil the U.S. and Japanese governments, given the scale of the collapse and U.S. government loan guarantees for new reactors.

Westinghouse said it has secured $800 million in financing to fund and protect core businesses during its reorganization.

Toshiba, whose shares have crashed as the nuclear problems surfaced, said it would guarantee up to $200 million of the financing for Westinghouse.

NUCLEAR FALLOUT

Westinghouse, which Toshiba acquired a decade ago, has nuclear projects in varying degrees of development in India, the United Kingdom and China. The U.S. unit said its operations in Asia, Europe, the Middle East and Africa would not be impacted by the filing.

The U.S. business is at the heart of the collapse, stemming from the ill-conceived acquisition of a U.S. nuclear construction company in 2015.

Japan fears Westinghouse’s collapse will incite criticism from U.S. President Donald Trump over the impact it could have on local jobs and finances as the bankruptcy could increase costs borne by U.S. taxpayers for two nuclear power plants projects in Georgia and South Carolina.

The U.S. government granted loan guarantees totaling $8.3 billion to the utilities commissioning the Georgia project.

Japan’s government spokesman Yoshihide Suga said the two governments were having thorough discussions on the issue.

CHIP BUSINESS SALE

Toshiba will close the first round of bids for its chip business – the world’s second-biggest NAND chip producer – on Wednesday.

A source with knowledge of the issue said that about 10 potential bidders had shown interest, including Western Digital Corp (WDC.O) which operates a Japanese chip plant with Toshiba, rival Micron Technology Inc (MU.O), South Korean chipmaker SK Hynix Inc (000660.KS) and financial investors.

Tsunakawa said offers received so far for the unit are likely to allow the company to avoid falling into negative shareholder equity. Toshiba believes the unit will be valued at least 2 trillion yen ($18 billion), he added.

The government-backed Innovation Network Corporation of Japan, and Development Bank of Japan are unlikely to join the first round, sources said, although they were expected to enter later bidding rounds as part of a consortium.

The sources declined to be identified as they are not authorized to speak on the matter.

A separate source said that Foxconn (2317.TW), the world’s largest contract electronics manufacturer, is expected to place an offer which is likely to be the highest bid. Other sources have said the Japanese government is likely to block a sale to Foxconn due to its deep ties with China.

NUCLEAR REVIVAL FIZZLES

Toshiba acquired Westinghouse in 2006 for $5.4 billion, then a major bet on a rebirth in nuclear projects due to high oil and gas prices, convinced that governments would cap carbon emissions to prevent global warming.

The company expected that it would win contracts to build dozens of its new AP1000 reactors, allowing it to build a pipeline of future work for its nuclear power plant maintenance division.

Regulators in both Georgia and South Carolina approved the construction of AP1000 reactors in 2009, a sign of a nuclear renewal taking hold. U.S. regulators and countries around the world were then also evaluating other proposals for nuclear projects.

But the activity stalled by the end of 2011 when the United States failed to adopt legislation curbing carbon emissions. The Fukushima nuclear accident in Japan also slowed worldwide nuclear development, causing delays at Westinghouse’s projects in Georgia and South Carolina and ballooning safety costs at existing nuclear plants.

(Reporting by Makiko Yamazaki and Tim Kelly; Additional reporting by Kentaro Hamada, Yoshiyasu Shida, Taiga Uranaka, Hitoshi Ishida and Sam Nussey in Tokyo, Scott DiSavino and Jessica DiNapoli in New York and Tom Hals in Wilmington, Delaware; Writing by Naomi Tajitsu and Clara Ferreira Marques; Editing by Edwina Gibbs)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/MkthVmqZBI4/us-toshiba-accounting-board-idUSKBN17006K

Ford warns Brexit deal must include tariff-free access to customs union


LONDON U.S. carmaker Ford (F.N) said on Wednesday that Britain must secure a Brexit deal which includes full tariff-free access to the entire customs union of European countries, not just the 27 other members of the European Union.

Ford builds vans in Turkey, which is not part of the EU but is in the EU customs union.


“Any deal must include securing tariff-free trade with the wider Customs Union and not just the EU27, whilst retaining access to the best talent and resources,” a spokesman said ahead of the formal triggering of divorce talks.

(Reporting by Costas Pitas; editing by Stephen Addison)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/5HOaZiQE4SY/us-britain-eu-ford-idUSKBN17011M