TOKYO (Reuters) - Toshiba Corp 6502.T is 'actively considering' a sale and other strategic options for U.S. nuclear unit Westinghouse, the group said on Tuesday, as it expanded a probe into problems there that caused it to miss an earnings deadline for a second time.

The Japanese conglomerate said it believed it could find buyers for a majority stake in Westinghouse despite the potential for future losses as the unit had a stable fuel and services business.

But Chief Executive Satoshi Tsunakawa sidestepped questions about a potential Chapter 11 filing for Westinghouse, saying only there were various options. Sources have said bankruptcy lawyers have been hired as an exploratory step.

A sale would represent the latest in a series of drastic steps as Toshiba grapples with a multibillion dollar financial maelstrom stemming from Westinghouse’s ill-fated purchase of a U.S. nuclear power plant construction company in 2015.

It has already put up most or even all of its prized memory chip business for sale to cope with an upcoming $6.3 billion writedown for the nuclear business and to create a buffer for potential losses down the road.

Westinghouse has been plagued by huge cost overruns at two U.S. projects in Georgia and South Carolina and liabilities related to those projects mean it is unlikely to be an easy asset to sell, despite attractive technology.

Tsunakawa emphasized that the projects were only a small part of Westinghouse’s business.

“Around 80 percent of Westinghouse’s revenues come from stable businesses in services and fuel-related businesses so I think that will be taken into consideration too,” he told a news conference.

He added, however, that it was not yet clear yet whether Toshiba would be paid by the buyer or would have to pay the buyer to take Westinghouse off its hands.

Toshiba aims to have Westinghouse off its consolidated accounts by the end of the next financial year in March 2018, he said.

KEPCO INTEREST?

South Korea’s KEPCO is seen by industry executives as the only potential buyer, as it expands in nuclear after a successful deal in the United Arab Emirates.

KEPCO said on Tuesday it would consider an approach by Toshiba. “We will review the overall project and weigh how beneficial this project would be to us,” a spokesman said.

Toshiba Corp CEO Satoshi Tsunakawa attends a news conference at the company's headquarters in Tokyo, Japan March 14, 2017. REUTERS/Issei Kato

Earlier in the day, Toshiba said its auditing committee had confirmed that certain Westinghouse senior managers had exerted ‘inappropriate pressure’ in the accounting for the acquisition of the U.S. nuclear power plant construction company in its third-quarter earnings.

The TVs-to-construction conglomerate now needs to check if pressure was exerted in preceding quarters as it would also be filing nine-month results and whether there were ‘other inappropriate pressures’ at the time of the acquisition.

Toshiba, for whom the latest scandal is its second in two years, said it would also introduce fresh measures to overhaul its governance, including improving board level oversight, internal controls, risk management and headquarters’ grip on the activities of its affiliates.

It estimated that it could post an operating profit of 70 billion yen ($610 million) in the next financial year excluding Westinghouse and its chips business, and also forecast an operating profit of 210 billion yen two years later.

Its remaining business focus would be social infrastructure such as elevators, water treatment and railway systems.

Those forecasts helped its stock recover from sharp losses to end 0.5 percent higher on the day.

Tsunakawa separately confirmed that Toshiba would be taking national security concerns into account when selecting bidders for its memory chip unit. That stance would put U.S. suitors at a major advantage as Japan’s government is worried about the loss of key technology to China.

Toshiba gained a new extension until April 11 for third-quarter earnings which follow its first postponement of audited earnings a month ago. If it fails to meet that deadline and does not gain another extension it would have until April 21 to submit the earnings or be delisted.

Toshiba is also due to submit on Wednesday a report to the Tokyo Stock Exchange on its internal controls in the wake of its latest financial woes as well the 2015 accounting scandal. That could eventually also lead to a delisting if the bourse finds Toshiba’s efforts unsatisfactory.

It will also meet with creditor banks on Wednesday to explain the situation, sources familiar with the matter said.