A subsidiary of Canada’s Brookfield Asset Management plans to acquire Westinghouse Electric, the bankrupt nuclear services company owned by Toshiba, for $4.6 billion.
Brookfield Business Partners said in a statement on Thursday in which in which as well as also institutional partners might use $1 billion of equity as well as also $3 billion of long-term debt financing to buy the Pittsburgh-based business, its first investment in nuclear power.
The buyers are also assuming Westinghouse’s underfunded pension plan.
brand new York-listed shares of Brookfield Business Partners were up 3.4 percent in afternoon trading.
The deal will be required to close from the third quarter yet will require approval via regulators as well as also the U.S. Bankruptcy Court.
Westinghouse has said in which will be aiming to exit bankruptcy as soon as March, which might allow Toshiba to book tax benefits from the current fiscal year.
“Brookfields acquisition of Westinghouse reaffirms our position as the leader of the global nuclear industry, said Westinghouse Chief Executive Officer José Emeterio Gutiérrez.
Toshiba did not immediately respond to requests for comment.
The Brookfield group of companies will be among the entire world’s largest investors in stable, long-lived assets such as utilities, real estate, energy as well as also infrastructure.
“Acquiring Westinghouse definitely fits the risk approach they have,” said Mycle Schneider, an energy as well as also nuclear policy consultant in Paris. “They buy assets in shaky situations.”
Last year, Brookfield Asset Management acquired control of two owners of renewable energy projects, TerraForm Global as well as also TerraForm Power, via SunEdison, which had filed for Chapter 11.
In 2016, Brookfield Business Partners converted debt to a large equity stake in a Texas power producer in which emerged via Chapter 11 as well as also became Vistra Energy. as well as also in November, Brookfield Property Partners offered to buy the remaining shares in General Growth Properties, adding to a large stake in which purchased to bring the mall owner out of bankruptcy.
Schneider said he was surprised in which Brookfield acquired Westinghouse, given in which the company has no different nuclear businesses. Westinghouse will be one the entire world’s leading suppliers of nuclear fuel, as well as also in which provides some form of service to 80 percent of the entire world’s 450 commercial reactors, according to court records.
Those two business lines generated combined cash flow of $403 million on revenue of about $3.1 billion in Westinghouse’s 2015 financial year, according to court records.
However, the company suffered after in which agreed to build two plants from the U.S. Southeast on fixed-cost contracts. The project went billions of dollars over budget, as well as also Westinghouse filed for bankruptcy in March to escape the contracts.
Construction of brand new nuclear power plants globally has dropped to the lowest level in a decade following renewed safety concerns after the Fukushima disaster in Japan in 2011.
One of Westinghouse’s unfinished U.S. projects, known as Vogtle in Georgia, will continue with Southern Co. replacing the company as the project manager. A South Carolina project known as V.C. Summer was abandoned in July.
The lead utility behind the V.C. Summer project, Scana Corp , agreed on Wednesday to a $7.9 billion takeover bid via Dominion Energy Inc.
Westinghouse has joined a consortium bidding to provide nuclear power in Saudi Arabia, one of the biggest brand new markets from the entire world. Bringing Westinghouse out of bankruptcy could help close a proposed deal for six of the company’s brand new AP1000 reactors in India.