BATON ROUGE, La. ? Engineering and construction company The Shaw Group Inc. plans to sell its minority investment in nuclear power plant company Westinghouse Electric Co. LLC back to Japan's Toshiba Corp.
The sale would help it shed some debt and strengthen its balance sheet. But it would also mean there would be no U.S. investors in Westinghouse, which is more than 100 years old and is based in Monroeville, Pa.
Shaw said Tuesday that it is still under contract with Westinghouse for six U.S. nuclear power plants and four plants under construction in China. The Baton Rouge, La., company also expects to continue to work with Westinghouse and Toshiba on certain projects.
Shaw subsidiary Nuclear Energy Holdings LLC obtained a 20 percent stake in Westinghouse in October 2006 for $1.08 billion, while Toshiba purchased a 77 percent interest from the U.K.'s British Nuclear Fuels PLC for $4.2 billion and Japanese heavy machinery maker IHI Corp. bought the remaining 3 percent.
By selling its Westinghouse stake, Shaw said it would get rid of about $1.7 billion in debt. Recently, the drop in the U.S. dollar versus the yen has negatively affected the Westinghouse segment, because Shaw used bonds denominated in yen to finance its investment in the business.
Nuclear Energy plans to exercise put options to sell its Westinghouse investment back to Toshiba. If it receives the necessary consents, Nuclear Energy will formally notify Toshiba and the shares will transfer 90 days thereafter. Funds received must be used to redeem bonds on the next interest payment date.
If Nuclear Energy does not receive the necessary consent to grant the bonds early, the put options will be automatically exercised on Oct. 6, 2012 for cash settlement on Jan. 4, 2013. Proceeds from the sale will be used to repay bonds maturing March 15, 2013.
Shaw's shares slipped 30 cents to $21.53 in premarket trading.
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