Shaw to sell Westinghouse stake back to Toshiba

6 September 2011

Toshiba Corporation is to increase its stake in nuclear power plant vendor Westinghouse Electric Company to 87%, by acquiring all of the shares held by The Shaw Group’s subsidiary Nuclear Energy Holdings.

Shaw paid $1.08 billion for a 20% share of the US vendor in 2006, financing its investment using yen-denominated bonds. On 6 September, Shaw announced that it is exercising an option to sell its investment in Westinghouse back to Toshiba.

“Shaw Group issued yen-denominated bonds at the time of its initial purchase of the stock, and Toshiba understands that, due to the recent significant appreciation of the Japanese yen against the U.S. dollar, Shaw Group has incurred a substantial foreign exchange loss on the bonds,” Toshiba said in a statement.

Toshiba is obligated to pay Shaw at least 96.7% of the principal amount of the bonds. Speaking in a conference call J.M. Bernhard Jr., Shaw's chairman, president and chief executive officer said that Toshiba would pay around $1.6 billion for the stake. The sale would effectively wipe out $1.7 billion in debt, leaving the company with a strong balance sheet, he said.

The put options will be exercised automatically on 6 October 2012, if bondholders don’t agree to redeem the bonds early, Shaw said. Proceeds from the sale would be used to repay the bonds in full on 15 March 2013.

Both Shaw and Westinghouse confirmed that the sale would have no impact on any of the four AP1000 nuclear power plants currently under construction in China or the six under contract in the United States. Bernhard said that Shaw ‘fully expects’ to continue working on future AP1000 projects.

Westinghouse, however, said that it would also consider selecting new partners particularly for projects in Europe, South American and India.

“We will continue to identify additional partners and suppliers, including local construction companies with which we can partner while maintaining our collaborative relationship with the Power Group at Shaw to capture and share best practices,” said Aris Candris, president and CEO of Westinghouse

In a statement Toshiba also said that “it remains open to the idea of inviting the participation of new investors in Westinghouse,” adding that several companies had already expressed interest in investing in Westinghouse.

Once the acquisition of Shaw’s stake in Westinghouse is complete, Toshiba’s stake in the company will increase from 67% to 87%. The remaining shareholders in Westinghouse are Kazakh state-owned company Kazatomprom owning a 10%, and Japan’s Ishikawajima-Hariwa Heavy Industries with the remaining 3%.

FilesReactor-by-reactor Fukushima Daiichi restoration progress summary as of 7 September, from JAIF

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