Shaw Group to sell its stake in Westinghouse
BATON ROUGE, Louisiana
Engineering and construction company The Shaw Group Inc will sell its minority investment in nuclear power plant company Westinghouse Electric Co LLC back to Toshiba Corp.
The sale will help Shaw shed some debt and strengthen its balance sheet. But it also means that there will no longer be any US investors in Westinghouse, which is more than 100 years old and is based in Pennsylvania.
While Toshiba is taking a larger stake in Westinghouse, the Japanese company said it “remains open to the idea” of inviting in new investors if they share its long-term vision and business strategy for Westinghouse.
Toshiba said several companies have already expressed interest in possible investments.
Shaw said that it is still under contract with Westinghouse for six US nuclear power plants and four plants under construction in China. The Baton Rouge, Louisiana, company also expects to continue to work with Westinghouse and Toshiba on certain projects.
Westinghouse said in a statement that Shaw’s sale of its minority stake will not impact any of the US plants or the ones under construction in China. The plants in China are expected to be operational starting in 2013.
Shaw subsidiary Nuclear Energy Holdings LLC obtained a 20 per cent stake in Westinghouse in October 2006 for US$1.08 billion, while Toshiba purchased a 77 per cent interest from the UK’s British Nuclear Fuels PLC for US$4.2 billion and Japanese heavy machinery maker IHI Corp bought the remaining three per cent. Toshiba later sold 10 per cent of its interest to Kazatamprom, a company based in Kazakhastan.
Once Shaw sells its Westinghouse stake, Toshiba will have an 87 per cent interest in Westinghouse.
Shaw didn’t cite a price for its Westinghouse stake. But it said by selling its stake, it would get rid of about US$1.7 billion in debt. Recently, the drop in the US dollar versus the yen has negatively affected the Westinghouse segment, because Shaw used bonds denominated in yen to finance its investment in the business.
Nuclear Energy plans to exercise put options to sell its Westinghouse investment back to Toshiba. If it receives the necessary consents, Nuclear Energy will formally notify Toshiba and the shares will transfer 90 days thereafter. Funds received must be used to redeem bonds on the next interest payment date.
If Nuclear Energy does not receive the necessary consent to grant the bonds early, the put options will be automatically exercised on October 6, 2012 for cash settlement on January 4, 2013. Proceeds from the sale will be used to repay bonds maturing March 15, 2013.
Toshiba said the acquisition’s closing date has yet to be determined.
Shaw’s shares added US$1.19, or 5.5 per cent, to US$23.02 in midday trading yesterday. The stock has traded between US$20.24 and US$41.62 over the last year.
AP
