A Canadian investment fund is planning to buy bankrupt United States nuclear infrastructure firm Westinghouse Electric from Toshiba. The deal is supposed to be concluded by the third quarter of this year.
Westinghouse said Thursday that the deal with Brookfield doesn't involve cash, but includes the assumption of a number of pension, environmental and operating obligations.
Westinghouse has said it is aiming to exit bankruptcy as soon as March, which would allow Toshiba to book tax benefits in the current fiscal year.
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The proposed acquisition by Brookfield Business Partners together with institutional partners covers substantially all of the global business of Westinghouse Electric Company and its affiliated debtors and debtors-in-possession. Toshiba did not immediately respond to requests for comment. But because Westinghouse has filed for Chapter 11 bankruptcy protection, it is not treated as Toshiba's consolidated subsidiary.
The company's January 4 announcement said the $4.6 billion purchase price "for substantially all of the global business of Westinghouse Electric Company LLC and its affiliated debtors and debtors-in-possession excludes cash, but includes the assumption of certain pension, environmental and other operating obligations".
However, the company suffered after it agreed to build two plants in the U.S. Southeast on fixed-price contracts.
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Since then, US producers' share of the American market has plummeted from 60 percent to 36 percent, the company said. Following a period of tension over possibly having more taxes imposed by Canada's neighbours to the south, the U.S.
One of Westinghouse's unfinished US projects, known as Vogtle in Georgia, will continue with Southern Co replacing the company as the project manager.
Brookfield won an auction to propose the best possible offer for the company, and has a plan to reorganize its bankrupt USA assets as well, a person familiar with the offer told Bloomberg. Throughout the process, Westinghouse will continue to operate in the ordinary course of business under its existing senior management.
Toshiba acquired Westinghouse in 2006 for 5.4 billion dollars.
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Created to be safer than reactors of old, the Westinghouse AP1000 design was supposed to revive an industry plagued by the accident at Three Mile Island in 1979. Four research analysts have rated the stock with a buy rating, Brookfield Business Partners L.P. Limited Partnership Units now has a consensus rating of "Buy" and a consensus price target of $29.66.