Engie stake sale deepens doubts over UK nuclear project

* Toshiba (Swiss: TOSH.SW - news) to buy Engie (LSE: 0LD0.L - news) 's 40 pct stake for $139 mln

* Westinghouse bankruptcy allowed Engie to sell - Toshiba

* Toshiba says continues to look for new investors for NuGen (Adds details, background, NuGen, UK government comment)

By Karolin Schaps, Makiko Yamazaki and Benjamin Mallet

TOKYO/PARIS/LONDON, April 4 (Reuters) - Toshiba has been forced to buy out French utility Engie from a project to build three nuclear reactors in Moorside, northwest England, adding to strains on the Japanese company's finances and to uncertainty over the project.

Engie said on Tuesday it was exercising its right to sell its 40 percent stake in the NuGen venture to Toshiba following the bankruptcy of the Japanese firm's Westinghouse unit. Toshiba will pay 15.3 billion yen ($138.5 million) for the stake.

Toshiba is now the sole owner of NuGen, but has said it is looking for more investors to join the $15-20 billion project or to sell out altogether.

Britain needs to invest in new infrastructure to replace aging coal and nuclear plants set to close in the 2020s, but has struggled to get large projects built, especially nuclear, due to the costs involved.

EDF (Paris: FR0010242511 - news) 's 18 billion pound ($22.5 billion) Hinkley Point C nuclear project in southwest England got the final go-ahead in 2016 after several years of delay, but only after securing backing from the French government.

The British government has been working to attract new investors to NuGen, and some analysts said Engie's departure might make it easier for Toshiba to sell NuGen as a whole.

Korea Electric Power Corp (KSE: 015760.KS - news) (KEPCO) is a potential investor after its chief executive said last month it was in talks to buy a stake in NuGen.

Britain's energy minister is currently in South Korea for talks on future collaboration between the two countries, including nuclear projects, a government spokeswoman said.

"NuGen has been working tirelessly to bring in additional investment to support the Moorside project," said a spokesman for the venture.

The filing for Chapter 11 bankruptcy protection by Toshiba's U.S. nuclear unit Westinghouse Electric Co last month was as "an event of default" that allowed Engie to exercise its option to sell its stake to Toshiba, the Japanese firm said.

Toshiba added the $139 million purchase price was equivalent to what Engie had invested in NuGen or the open market value of the stake.

Toshiba paid $139 million in late 2013 when it purchased a 50 percent stake in NuGen from Spain's Iberdrola (Amsterdam: ID6.AS - news) . [http://uk.reuters.com/article/uk-britain-nuclear-iberdrola-idUKBRE9BM04N20131223 ]

The Japanese firm said the transaction could cause a writedown of 49.7 billion yen, but this had been already factored in its estimate of a net loss of 1 trillion yen for the fiscal year that ended on Friday.

($1 = 110.4500 yen) (Additional reporting by Susanna Twidale; Editing by Muralikumar Anantharaman and Mark Potter)