Westinghouse in dollars 1.5bn shake-up

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The Independent Online
NEW YORK - Westinghouse Electric, the US defence-to-broadcasting conglomerate struggling to redefine itself after more than dollars 5bn in losses, announced a dollars 1.5bn restructuring plan yesterday that still left many on Wall Street disappointed, writes Larry Black.

Michael Jordan, the chief executive recruited to the post six months ago, said Westinghouse would take a dollars 750m pre-tax charge against its fourth-quarter results, and spend that much again shoring up its weak equity base and under-funded pension plan.

The company will also cut its annual dividend in half, to 20 cents a share.

The charges will cover the costs of cutting its workforce by about 6,000 employees over the next two years, selling its electrical supply business, settling outstanding lawsuits, and closing its environmental clean-up business.

Having disposed of its haemorrhaging financial services business, almost halving its dollars 8.4bn debt in the process, Mr Jordan now hopes to 'clean the decks' with this package, analysts said.

The company has made 'tremendous progress' in liquidating Westinghouse Credit, Mr Jordan said, and plans to accelerate 'the divestiture of non-core assets'.

But some argue that the company could have cut as many as 10,000 employees, or about 10 per cent of the workforce at its surviving businesses. Westinghouse shares tumbled one-eighth to dollars 14on the announcement.

Westinghouse's pension liability remains a considerable drain on assets that might other be used to retire debt, accounting for dollars 311m in charges. It will contribute an additional dollars 200m worth of shares to the employee plan.

Analysts have been particularly worried about the lack of a chief financial officer since the departure of Warren Hollinshead in September. But an appointment is now expected by January.