Canada's Brookfield buys Westinghouse's global nuclear arm

Canada's Brookfield buys Westinghouse's global nuclear arm

Toshiba has sold its USA nuclear power business, Westinghouse, for US$4.6 billion to a group of investment companies led by Brookfield Asset Management.

Brookfield Business Partners L.P. Limited Partnership Units (NYSE:BBU) had its price target raised by equities researchers at Credit Suisse Group to $3.15 in a research report issued to clients and investors on Friday.

The deal would be funded with approximately $1 billion of equity, approximately $3 billion of long-term debt financing and the balance by the assumption of certain pension, environmental and other operating obligations.

Cyrus Madon, chief executive of Brookfield Business Partners, said: "Westinghouse is a high-quality business that has established itself as a leader in its field, with a long-term customer base and a reputation for innovation". Toshiba did not immediately respond to requests for comment.

Last year, Brookfield Asset Management acquired control of two owners of renewable energy projects, TerraForm Global and TerraForm Power, from SunEdison, which had filed for Chapter 11.

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The deal excludes the two projects which helped bring down the company founded by George Westinghouse in 1866: plans to build four of its AP1000 reactors for USA utilities in SC and Georgia.

The deal marks a positive turn in a long saga of financial woes stemming from USA reactor projects that dragged Westinghouse into bankruptcy, ensnared its parent, Toshiba Corp., and also battered US utilities that had taken on their construction.

The deal won't include what had been the company's most prized projects - plans to build its AP1000 reactors for USA utilities in SC and Georgia. And in November, Brookfield Property Partners offered to buy the remaining shares in General Growth Properties, adding to a large stake it purchased to bring the mall owner out of bankruptcy. Throughout the process, Westinghouse will continue to operate in the ordinary course of business under its existing senior management. Westinghouse filed for bankruptcy last March after two nuclear power plants it had designed and was constructing in the U.S. Southeast had gone billions of dollars over their fixed-cost contracts.

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

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