Monday, 21 January, 2019

Brookfield Puts Up $4.6B For Bankrupt Westinghouse

Toshiba sold its prized chip unit last year after Westinghouse filed for bankruptcy Wikimedia Commons Toshiba sold its prized chip unit last year after Westinghouse filed for bankruptcy Wikimedia Commons
Nellie Chapman | 12 January, 2018, 21:06

A group led by Brookfield Business Partners LP announced yesterday that it has entered into an agreement to purchase nuclear engineering firm Westinghouse Electric Co. for $4.6 billion.

Representatives for Blackstone and Apollo weren't immediately available for comment.

Those two business lines generated combined cash flow of $403 million on revenue of about $3.1 billion in Westinghouse's 2015 financial year, according to court records.

Since then, reports have surfaced that President Donald Trump's administration is encouraging Saudi Arabia to consider bids by Westinghouse and other USA companies to build reactors - a politically controversial bid considering previous US agreements prohibited the enrichment of uranium.

Plagued by project delays and cost overruns that came up to US$6 billion for two large-scale projects in the United States, Westinghouse filed for Chapter 11 bankruptcy protection last March.

New nuclear power construction globally has dropped to the lowest level in a decade following renewed safety concerns after the Fukushima disaster in Japan in 2011.

The deal won't include what had been the company's most prized projects - plans to build its AP1000 reactors for USA utilities in SC and Georgia. A SC project known as V.C. Summer was abandoned in July. A deal proposed Wednesday could mean $1.3 billion in refunds for utility customers affected by the failed project.

Westinghouse has joined a consortium bidding to provide nuclear power in Saudi Arabia, one of the biggest new markets in the world.

Toshiba stock rose about 2% in Tokyo following the news of the Westinghouse deal. It remains a major shareholder in the Texas company.

Separately, TheStreet downgraded shares of Brookfield Business Partners L.P. Limited Partnership Units from a "c" rating to a "d" rating in a report on Monday, November 6th. Brookfield Business Partners said it will fund roughly half of the equity on closing using existing funds and may syndicate some of the investment to other institutional investors at a later date.

Westinghouse ran up such huge liabilitites that Toshiba put the memory business up for sale.

Only a day before, India's Minister of Atomic Energy and Space, Dr Jitendra Singh had informed the Parliament about the government's decision to go ahead with the proposed deal despite the uncertainty surrounding the ownership of Westinghouse that filed for bankruptcy previous year following the Japanese Toshiba Corporation's decision to pull out of the nuclear power plant sector. Get your FREE trial to Buyouts!