Westinghouse eyes Saudi, India deals as end to bankruptcy nears

PARIS: 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 in January agreed to buy Westinghouse from Toshiba for $4.6 billion after cost overruns on U.S. reactors pushed the atomic energy pioneer into bankruptcy in March 2017.

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.