Westinghouse files bankruptcy to undertake strategic restructuring

By Caroline Salls

Pittsburgh, March 29 – Westinghouse Electric Co., LLC filed Chapter 11 bankruptcy Wednesday in the U.S. Bankruptcy Court for the Southern District of New York “to undertake a strategic restructuring as a result of certain financial and construction challenges in its U.S. AP1000 power plant projects,” according to a news release.

“Today, we have taken action to put Westinghouse on a path to resolve our AP1000 financial challenges while protecting our core businesses,” interim president and chief executive officer Jose Emeterio Gutierrez said in the release.

“We are focused on developing a plan of reorganization to emerge from Chapter 11 as a stronger company while continuing to be a global nuclear technology leader.”

The company reached an agreement with each owner of the U.S. AP1000 projects to continue these projects during an initial assessment period.

Westinghouse said these agreements ultimately allow it and the project owners to continue negotiations for up to the first 30 days of the Chapter 11 cases in order to explore and assess scenarios for the potential resolution of the projects.

The company said in the news release that it will continue its existing projects in China and pursue other potential projects in the future.

Westinghouse’s operations in its Asia and Europe, the Middle East and Africa (EMEA) regions are not impacted by the Chapter 11 filings.

DIP financing

In conjunction with the bankruptcy filing, Westinghouse obtained $800 million of debtor-in-possession financing to help fund and protect its core businesses during its reorganization.

Specifically, the company said the DIP financing will fund its core businesses of supporting operating plants, nuclear fuel and components manufacturing and engineering as well as decommissioning, decontamination, remediation and waste management as it works to reorganize around these strong business units.

Existing letters of credit have been cash collateralized in full and will remain in place. The financing will also allow for new letters of credit to be issued.

Apollo Investment Corporation, AP WEC Debt Holdings LLC, and Midcap Financial Trust are the DIP financing commitment parties. The package also includes a $225 million letter-of-credit facility from Citigroup Global Markets Inc.

Interest on Base rate loans will accrue at the Base rate plus 525 basis points, and interest on Libor loans will accrue at Libor plus 625 bps.

The facility will mature in one year, subject to a borrower’s option to extend the maturity date by 12 months.

According to a letter filed Wednesday with the court, Toshiba Corp. has agreed to a backstop guarantee of up to $200 million of the DIP facility.

As a result, commitment parties Goldman Sachs Bank USA, HPS Investment Partners, LLC and Silver Point Finance, LLC said they are prepared to “materially reduce the funded spread on the DIP facility and provide other concessions to be discussed.”

As part of the Chapter 11 filings, Westinghouse also filed several “first-day” motions with the court to ensure business continuity through payment of employee salaries, wages and benefits, as well as pay its suppliers for the delivery of services.

Debt details

According to court documents, Westinghouse has $1 billion to $10 billion in both assets and debt.

The company’s largest unsecured creditors are

• Fluor Enterprises Inc. of Greenville, S.C., with a $193.89 million trade debts claim;

• CB&I of The Woodlands, Texas, with a $145 million deferred purchase price claim;

• Newport News Industrial Corp. of Newport News, Va., with an $18.46 million trade debts claim;

• Nuclear Fuel Services Inc. of Erwin, Tenn., with a $10.09 million trade debts claim;

• Vigor of Clackamas, Ore., with an $8.35 million trade debts claim;

• Thompson Construction Group Inc. of Sumter, S.C., with an $8.03 million trade debts claim;

• RSCC Wire & Cable LLC of East Granby, Conn., with a $7.93 million trade debts claim;

• Curtiss Wright of Charlotte, N.C., with a $7.78 million trade debts claim; and

• SSM Industries Inc. of Pittsburgh, with a $5.48 million trade debts claim.

The company is represented by Weil, Gotshal & Manges LLP in its Chapter 11 cases.

Westinghouse is a Cranberry Township, Pa.-based nuclear products and services company and a subsidiary of Toshiba. The Chapter 11 case number is 17-10751.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.