CB&I Sues Westinghouse Over $2B Closing Agreement Claim
Westinghouse Electric's recent purchase of Chicago Bridge and Iron's (CB&I's) nuclear construction segment is embroiled in a new legal challenge, as CB&I filed suit in the Delaware Court of Chancery on July 21 over a $2 billion claim related to the deal
The dispute is rooted in post-closing "true-up" working capital adjustments related to the sale of CB&I Stone & Webster to Westinghouse. After closing the deal, CB&I claimed it is entitled to $428 million in working capital. However, Westinghouse claimed, using a disputed provision in the agreement, that CB&I owes it $2 billion. According to a Reuters report, CB&I is suing to protect itself from the $2 billion claim.
"Over the course of the past several months the two parties have been faithfully following the process explicitly set out in the Purchase Agreement between them. It is therefore troubling that CB&I, after agreeing to and actively participating in that process, is seeking to disrupt it," said Westinghouse Senior Vice President and General Counsel Michael Sweeney in a statement on July 24.
"Nevertheless, we are confident that the transaction will be fully concluded in accordance with the Parties Purchase Agreement," he added.
Westinghouse, a group company of Japanese conglomerate Toshiba Corp., signed a definitive agreement to acquire CB&I Stone & Webster on Oct. 27, 2015, and completed the acquisition on December 31, 2015.
Westinghouse said that adding CB&I's nuclear construction and integrated services arm to its own nuclear plant fuel, products, and technologies business essentially expanded Westinghouse's future business scope beyond new plant projects-which have slowed globally on cost and safety concerns-and toward decontamination, decommissioning, remediation, project management, and environmental services.
The new business-including project operations and assets concerning AP1000 contracts in the U.S. and in China- will reside within a newly created Westinghouse subsidiary called WECTEC.
CB&I, which acquired the Stone and Webster nuclear construction business as part of its $3 billion acquisition of The Shaw Group in 2012, sold it-even though it would incur a $1 billion loss from the transaction-because it provided a "complete end to responsibility or liability" for delays plaguing the Westinghouse AP1000 units under construction at the V.C. Summer project in South Carolina and the Vogtle project in Georgia.
CB&I President and CEO Philip Asherman in October 2015 said the sale "provides, through Westinghouse, a single focus of responsibility and accountability for the completion" of the AP1000 units, while providing CB&I shareholders with "clarity and increased predictability from our growing backlog of work in markets that are more strategic to our future growth."
-Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)
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