Westinghouse Buys CB&I to Beef Up Its Nuclear Business

Fitch views Westinghouse's acquisition of the Stone & Webster nuclear construction business from Chicago Bridge & Iron Company N.V. (CB&I, not rated by Fitch) and the potential engagement of Flour Corporation ('A-'/Stable Outlook by Fitch) as a subcontractor favorably.

Georgia Power Co. and other parties are settling lawsuits over the construction of a new nuclear power plant, removing a few uncertainty surrounding the project.

Fluor Corporation (FLR) confirmed today that it has been named by Westinghouse Electric Company, LLC (Westinghouse), to manage construction of two Westinghouse AP1000® nuclear power reactor projects in Georgia and South Carolina - owned and operated by Southern Company and SCANA/Santee Cooper, respectively.

Georgia Power along with the other Vogtle owners have been involved in a long standing dispute with EPC contractors regarding the costs associated with the delay in the construction of Vogtle 3 and 4 units, whose timeline has slipped 39 months from the originally proposed April 2016 and April 2017 completion dates. Westinghouse, a Toshiba Corp. unit, will lead construction at Plant Vogtle (VOH'-gohl), hiring Fluor Corp.to manage work. The Municipal Electric Authority of Georgia and the city of Dalton own smaller shares. "This transition is a positive development for all stakeholders in the current nuclear projects as it provides, through Westinghouse, a single focus of responsibility and accountability for the completion of the AP1000 units", said Philip K. Asherman, CB&I's President and Chief Executive Officer. CB&I will continue to provide a few parts. In connection with the transaction, CB&I anticipates incurring a non-cash after tax charge of approximately $1.0 - $1.2 billion related to a loss on the transaction and the impairment of goodwill and intangible assets, of which approximately $904 million will be recorded in the third quarter.

SCE&G said terms of the new construction contract with Fluor, which becomes effective immediately but is not expected to be finalized until December, could limit future construction cost increases at the new reactors. "Sixteen cents on the dollar is what we settled for", Fanning said.

SCE&G owns 55 percent of the Summer plant and public utility Santee Cooper owns the remaining 45 percent. Fanning and Scana said that Westinghouse would be able to claim substantial payments by meeting the current deadlines.