Shares in Tokyo Electric Power Co (TEPCO) lost more than a quarter of their value yesterday following a media report that the operator of the country’s tsunami-hit nuclear plant would log a US$7 billion loss in this fiscal year.
The stock was also hit by a reported comment by Tokyo Stock Exchange (TSE) president Atsushi Saito that TEPCO should file for bankruptcy protection, a move that could hit shareholders hard.
TEPCO stock fell to ￥206 mid-morning, down ￥80, or 28.0 percent, from Friday, the maximum loss allowed for one trading day. It closed a shade better at ￥207, down ￥79 or 27.62 percent.
The price means TEPCO’s 1.6 billion shares are worth a combined ￥331 billion (US$4.13 billion).
The Kyodo News agency reported on the weekend that the utility was expected to post a net loss of ￥570 billion, excluding results for other group companies, for the business year to March next year.
The reported loss excludes compensation for the tens of thousands of people affected by the ongoing crisis at its crippled Fukushima Dai-ichi nuclear power plant, Kyodo said, citing an internal company document.
TEPCO — one of the world’s largest utilities — supplies electricity to roughly one-third of Japan’s population. Its service area covers the economically vital Kanto region where Tokyo is located.
TEPCO said it expected its earnings results to be “very tough” for the current business year, without mentioning a specific figure.
“The main drag on earnings will be the expensive fuel costs for thermal power plants brought into service to make up for the shutdown of the two nuclear plants in Fukushima Prefecture,” a spokesman told Dow Jones Newswires.
The utility logged a record ￥1.247 trillion net loss for the year ended in March.
The TSE president said in an interview with the Asahi Shimbun online magazine Asahi Judiciary on Friday that TEPCO should follow the same path as flag carrier Japan Airlines, which filed for bankruptcy last year.
“If possible, it is desirable that TEPCO go through the same legal procedure as Japan Airlines,” Saito was quoted as saying in the interview.
However, the Tokyo bourse in a statement yesterday said: “The Tokyo Stock Exchange would like to clarify that, at this point, TSE is not aware of any fact -regarding said listed company [TEPCO] which should be considered to fall under the delisting criteria.”
Japan’s massive March 11 earthquake and tsunami knocked out cooling systems at the Fukushima plant, causing nuclear reactors to overheat and allowing radiation to leak into the air, sea and soil.
The worst nuclear disaster since Chernobyl in 1986 has forced the evacuation of tens of thousands of people from their houses, businesses and farms in a 20km radius around the plant.
There has been no official estimate of damages yet, but the sum is widely expected to reach several trillion yen.
Banks provided ￥2 trillion in emergency loans to TEPCO in April, but the amount of cash and deposits held by the company is expected to fall to ￥95 billion by the end of the current business year, Kyodo said.
The drop would stem from surging fuel costs as TEPCO makes up for lost nuclear capacity by increasing output from fossil fuel plants and from the redemption of corporate bonds, it reported.
The Japanese government last month announced a rough scheme for rescuing TEPCO to ensure the payment of compensation.
The scheme will involve the use of public funds and give the government a hand in supervising TEPCO, one of the world’s biggest power companies, to ensure it stays solvent and follows pledges to restructure.
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