Brookfield-led group to acquire Westinghouse for $4.6B
- 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.
- Westinghouse declared bankruptcy last year, endangering new nuclear build in the United States. The V.C. Summer project in South Carolina and the Vogtle nuclear project in Georgia being built by Southern Co. subsidiary Georgia Power and its partners, were both massively over budget and behind schedule.
- The deal would be funded with approximately $1 billion of equity, approximately $3 billion of long-term debt financing and the balance by the assumption of certain pension, environmental and other operating obligations.
The demise of Westinghouse was a major setback for the country's nuclear industry, potentially dooming new nuclear build in the U.S. Problems with its AP1000 nuclear reactor models led to two major nuclear projects falling behind schedule and mounting costs.
The issues led to Toshiba splitting into four subsidiaries to protect itself from the fallout; the century-old company said it would exit the construction business. Also in September 2017, reports emerged that a handful of companies were eyeing bids for the bankrupt firm.
Despite problems with two U.S. nuclear projects, Brookfield says the company is a leader in providing nuclear infrastructure and operates within a complex regulatory and licensing environment requiring depth of expertise and capability.
“Westinghouse is a high-quality business that has established itself as a leader in its field, with a long-term customer base and a reputation for innovation,” Cyrus Madon, CEO of Brookfield Business Partners, said in a statement announcing the deal
Madon said the investor group would bring its expertise and reputation as an operator of critical infrastructure, as well as facilities management capabilities "to enhance the company’s position as a leading global infrastructure services provider to the power generation industry.”
Subject to bankruptcy court approval and other closing conditions and regulatory approvals, the companies expect to close the deal in the third quarter of this year.
Brookfield Business Partners indicated it would fund approximately 50% of the equity on closing with its existing liquidity. A portion of Brookfield Business Partners' investment may be syndicated to other institutional investors.
Westinghouse was named Utility Dive's Disruptor of the Year in part because its Chapter 11 led to SCANA and Santee Cooper to abandon the V.C. nuclear project in South Carolina. While Southern Co.'s embattled Vogtle project got the greenlight to continue construction, the Public Utilities Commission' staff said the plant would not be economic even with possible nuclear credits. Duke Energy shelved plans for its proposed Lee nuclear project as well.
- The Canadian Press Brookfield-led group to buy Westinghouse from Toshiba for $4.6 billion
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