Brookfield “at a crossroads” on the opportunity to sell Westinghouse: Corporate

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February 08, 2021

Brookfield Business Partners plans to sell Westinghouse Electric Company, investment firm CEO Cyrus Madon said in a conference call with analysts on Feb.5 to discuss its fourth quarter financial results. Brookfield, headquartered in Bermuda, finalized the purchase of Westinghouse from Japanese company Toshiba Corporation in August 2018. This marked Westinghouse’s exit from US Chapter 11 bankruptcy protection as a corporation. restructured.

“We’re kind of at a crossroads because we could sell part of the business or all of the business, I guess, if we wanted to,” Madon said. “We could hang on to it and continue to milk this amazing cash flow, but it will all depend on how much value we can get versus what we can create by keeping it… But at some point we will definitely test the market one. a little bit and see if we can get a feel for the market value of the business. “

Madon underlined the “incredible” value of the US supplier of reactors. Brookfield’s “initial equity control” was $ 920 million for 100% of the company, which generates a 30% cash dividend yield. There is “still room to grow,” he added. “We may be looking at some form of monetization, but we would only do so at extraordinary value.”

Most of Brookfield’s profitability comes from companies that “are of size and generate stable cash flow,” he said. Four of its largest companies today – Westinghouse, Sagen (a private sector mortgage insurance provider in Canada), Clarios (a provider of automotive battery technology, manufacturing and distribution) and BRK Ambiental (a processing company of water) – generate more than 10 times the EBITDA than its four largest companies achieved in 2016.

At the end of the year, Westinghouse paid a dividend of $ 265 million, of which Brookfield received $ 115 million. In about 2.5 years, and with no increase in Westinghouse’s debt levels, Brookfield has received more than $ 370 million in dividends, which is almost all of its initial investment in stocks. “Westinghouse is a really great cash generator,” he said.

Brookfield COO Denis Turcotte said Westinghouse “plays a critical role in ensuring the safe and uninterrupted operation of customers’ electrical installations.” Most of the company’s profitability is generated by recurring plant maintenance and refueling shutdowns, as well as continuous improvement initiatives in operations, he said. Demand for Westinghouse fuel and services has barely been affected over the past 12 months, he added.

“We continued to focus on optimizing manufacturing, supply chain, and general and administrative costs. [general and administrative] costs, while building a global shared services organization that leverages economies of scale and regional advantages. We also revamped Westinghouse’s technology and innovation roadmap with a focus on digitization initiatives to improve the company’s cost position and our positioning to deliver unique digital products and services to its customers ” , did he declare.

Westinghouse has completed four “targeted acquisitions” in the past 18 months that have increased core engineering and service capabilities, added new digital products and services to its portfolio, and increased its presence in the Canadian nuclear services market, did he declare. Westinghouse is also developing carbon-free technologies to support the transition to distributed energy. Small modular reactors and microreactors represent a significant growth opportunity to bring clean and reliable energy to remote areas and industrial applications, given the growing interest in all markets for zero carbon energy, he said. he adds.

Westinghouse’s microreactor is designed to provide “competitive power with minimal maintenance,” he said. In October last year, it partnered to support the Canadian government’s studies of modular and microscopic applications as part of its goal of achieving net zero by 2050.

Research and writing by World Nuclear News




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