Westinghouse has signed a definitive agreement with consortium partner CB&I to acquire CB&I Stone & Webster, its nuclear construction and integrated services businesses. In a related move, Westinghouse has appointed Fluor to manage the two AP1000 construction projects currently under way in the USA.
Westinghouse is currently constructing eight AP1000 pressurized water reactors - four in the USA and four in China - with CB&I Stone & Webster as its consortium partner.
Under the agreement with CB&I announced yesterday, Westinghouse will acquire the business of engineering, construction, procurement, management, design, installation and commissioning of nuclear power plants, including the VC Summer project in South Carolina, the Vogtle project in Georgia, as well as projects in China. Westinghouse will also acquire CB&I's nuclear integrated services business, which includes small capital projects for existing US nuclear plants. The purchase will include 11 facilities in the USA and Asia.
Upon closing of the transaction - expected by the end of 2015 - Westinghouse will assume full responsibility for all AP1000 projects and the nuclear integrated services business.
In addition, Westinghouse has reached agreements with Southern Company and Scana Corporation - owners of the Vogtle and Summer plant, respectively - to resolve all outstanding claims and disputes including existing litigation with respect of the US projects. The agreements also include price and schedule adjustments.
Westinghouse will assume, and indemnify CB&I for, previous, current and future liabilities associated with the AP1000 projects. CB&I said it expects to receive cash payments from Westinghouse of $229 million, of which $161 million is anticipated to be received upon Westinghouse's "substantial completion" of the projects and $68 million upon reaching certain milestones related to CB&I's continued supply of "discrete scopes of modules fabricated pipe and specialty services" to Westinghouse on a subcontractor basis for the US projects.
Westinghouse said the deal supports its strategic growth initiatives "by expanding the company's capacities across its global footprint". The acquisition, it said, will support its growth in decontamination, decommissioning and remediation services; enhance its major nuclear project management and environmental services offerings; and "add to its innovation-driven engineering expertise". Westinghouse will create a new subsidiary to house all these businesses, as well as a new government services business that is under development.
Westinghouse president and CEO Danny Roderick said, "Westinghouse welcomes the CB&I Stone & Webster personnel. These highly skilled energy professionals will join us in being the first to innovate the next solution that will provide the clean, reliable nuclear energy the world needs."
CB&I president and CEO Philip Asherman said, "This transaction 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."
CB&I said it expects to incur a non-cash after-tax charge of between $1.0 and $1.2 billion related to a loss on the transaction and the "impairment of goodwill and tangible assets", of which some $904 million will be recorded in the third quarter.
Two Westinghouse AP1000 reactors are currently under construction at Vogtle and are expected to enter operation by mid-2019 and mid-2020, respectively. Two AP1000s are also under construction at VC Summer, which are due to start up in mid-2019 and early 2020. Four AP1000s under construction at Sanmen and Haiyang in China are scheduled to be in operation by the end of 2017.
In 2008, CB&I was awarded an engineering, procurement and construction (EPC) contract by Westinghouse to build two nuclear power containment vessels. In 2013, CB&I acquired Shaw Group - parent company of Stone & Webster - in a transaction worth an estimated $3 billion. Shaw had been in a consortium with Westinghouse to construct the US and Chinese units.
Fluor to manage US projects
Fluor Corp announced yesterday that it has been selected by Westinghouse to manage construction of the Vogtle and Summer AP1000 units. The Irving, Texas-based company said it will "immediately engage as a subcontractor to Westinghouse in the development of transition plans and definitive agreements".
Fluor said it will be providing "project execution and direction, accountability for and management of professional staff and craft personnel, and a focus on safety, quality and project delivery certainty". Its management plans for the projects will become effective at the close of Westinghouse's acquisition of CB&I Stone & Webster, the company noted.
Fluor's is to complete construction of the Vogtle and Summer AP1000s on a "cost reimbursable basis, without liability for pre-existing conditions associated with prior construction", it noted.
Researched and written
by World Nuclear News