January 24, 2019

Brookfield to buy Westinghouse for US$4.6bn

12 January 2018, 09:05 | Joann Bryant

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

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.

Brookfield Business Partners was an investor in the bankrupt power producer that emerged from Chapter 11 and became Vistra Energy Corp. A portion of Brookfield Business Partners' investment may be syndicated to other institutional investors.

"The decision to sell Westinghouse is good news for creditors, as well as our company", Toshiba said Friday. The Japanese electronics giant incurred massive losses from the company. Toshiba did not immediately respond to requests for comment.

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.

Westinghouse filed for chapter 11 bankruptcy protection in the United States in March 2017, partially blaming cost and time overruns at two U.S. nuclear plants in Georgia and SC.

The company, which is buying Westinghouse through its private equity unit Brookfield Business Partners, will fund the deal with $3 billion in debt and $1 billion in stocks, and it will also assume Westinghouse's pension and environmental commitments.

So why is Brookfield buying?

Hillsdale Investment Management Inc. raised its stake in shares of Brookfield Business Partners L.P. Limited Partnership Units by 3.9% during the third quarter. Instead, delays and overruns led to troubles that left Westinghouse's former parent, Toshiba Corp., fighting for survival past year after writing down the value of the unit by billions. Since acquiring Westinghouse in 2006, Toshiba's taken a $6.3B write-down on its 4 nuclear reactors, thanks to complications with construction that put projects over budget and over-deadline.

Toshiba has been majority owner of Westinghouse Electric since 2006 and achieved full ownership previous year by buying a minority shareholder's 10 per cent stake for about US$522 million.

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