Westinghouse eyes Saudi, India deals as end to bankruptcy nears

Shibaura Machine

27/06/2018 16:16

* Westinghouse sees no regulatory roadblocks to takeover
    * Brookfield to recapitalise the bankrupt reactor builder
    * Westinghouse resumes talks with India on six-reactor deal
    * Company confident it will be on Saudi tender shortlist

    By Geert De Clercq
    PARIS, June 27 (Reuters) - U.S. nuclear firm Westinghouse
expects to emerge from bankruptcy with sufficient equity in
coming weeks and is targeting Saudi Arabia and India for new
reactor sales, its CEO said. 
    Canada's Brookfield Asset Management  BAMa.TO  in January
agreed to buy Westinghouse from Toshiba  6502.T  for $4.6
billion after cost overruns on U.S. reactors pushed the atomic
energy pioneer into bankruptcy in March 2017.   urn:newsml:reuters.com:*:nL1N1OZ0XF
    Westinghouse CEO Jose Gutierrez said the Brookfield deal
would close as soon as it had been approved by U.S. and British
nuclear regulators and the Committee on Foreign Investment in
the United States (CFIUS).
    "We are confident we will get those approvals in the next
few weeks, we don't see any roadblocks," Gutierrez told Reuters
at the World Nuclear Exhibition in Paris.
    Once the deal is closed, Westinghouse will officially emerge
from bankruptcy and Brookfield will recapitalise the firm.
    "We will have the right capital structure and the necessary
cash for running our business," Gutierrez said.
    The amount of money to be injected is under discussion.
    Westinghouse hopes sales will get a boost when the first of
four long-delayed AP1000 reactors in China starts up this year. 
    Gutierrez said fuel had been loaded in the Haiyang 1 reactor
on Tuesday and the Sanmen 2 reactor was waiting for permission
to load fuel. The Haiyang 2 had finished hot functional testing
and would be ready to load fuel soon, he said. 
    Sanmen 1, in Zhejiang province, loaded fuel in April, ran
its first nuclear reactions in June and is set for commercial
operation by November, Chinese authorities said this month. 
    Contracts for the four reactors - two at Sanmen and two at
Haiyang in Shandong province - were signed in 2007-2009. The
first one had been scheduled to launch in 2014. 
    Gutierrez said Chinese authorities expect two or maybe three
AP1000s will connect to the grid before end of 2018. 
    Projects for six more AP1000s in China are pending and
Westinghouse expects China will build a fleet of at least 20
AP1000s in the coming decade. 
    As Westinghouse has transferred the technology to China it
will not benefit from new builds, but expects to earn money on
providing fuel and maintenance.
    About 85 percent of Westinghouse revenue comes from fuel and
services, only about 15 percent from building new reactors. 
    Not having a working AP1000 has hampered Westinghouse and
other vendors have won major tenders instead. 
    This month, Russia's Rosatom stole a march on Westinghouse
with a contract to sell four VVER-1200 reactors. Two of those
will be built at Xudaobao in northeast China, on a site once
earmarked for Westinghouse.
    In April, Westinghouse received strong support from U.S.
Energy Secretary Rick Perry for its plan to build six AP1000s in
India, a massive project set in motion by a U.S.-India agreement
10 years ago. But since Toshiba will no longer act as master
builder, there are doubts about the plan.
    "Now that we are emerging from Chapter 11, we are resuming
conversations with India," Gutierrez said.
    Westinghouse is also waiting for Saudi Arabia to decide on a
shortlist of two to three bidders to build two nuclear plants.
    Besides Westinghouse, state-owned companies from Russia,
France, China and South Korea are in the running. 
    "It is a reality that the other four bidders are countries
and we are a private company," Gutierrez said, adding that he
was confident that Westinghouse would be on the shortlist.
    The Saudi authorities had been due to decide at the end of
March. Once the shortlist is made, bidders will discuss business
models and financing, a process that will take at least another
year before Saudi Arabia picks a winner.
    Gutierrez said that during its bankruptcy, Westinghouse -
which sells services, fuel and spare parts to almost 80 percent
of world's 450 reactors - had not lost a single contract.
    Gutierrez had no news on Toshiba's attempts to sell its
NuGen unit, which has a project to build reactors in Britain. 
    Westinghouse is also working on finalising two AP1000
reactors in Vogtle, Georgia by 2021. Two other AP1000s under
construction in the United States were abandoned, half-built as
costs got out of hand. 

 (Reporting by Geert De Clercq
Editing by Edmund Blair)
 ((geert.declercq@thomsonreuters.com; +33 14949 5343; Reuters
Messaging: Twitter: @gvdeclercq))