Nuclear firm draws blueprint for settling filed claims

Westinghouse, ‘key stakeholders’ agree

Pittsburgh Post-Gazette

Vendors, employees, retirees and others who have filed claims against Westinghouse Electric Co. in the nuclear firm’s mammoth bankruptcy will get $1.15 billion from the $4.6 billion sale of Westinghouse to a Canadian asset management firm, a group of stakeholders has agreed.

Presenting a blueprint for how claims will be settled now that Brookfield Business Partners has agreed to buy it, Westinghouse told the bankruptcy judge that it had reached an agreement with a group of “key stakeholders” on how to proceed.

The company wouldn’t elaborate on who was consulted, but the group is likely to include its buyer, a committee representing unsecured credit holders, the Pension Benefit Guaranty Corp. and, possibly, Westinghouse’s impatient-to-be-anemptyparent Toshiba Corp.

The plan includes $1.15 billion to pay out unsecured creditors; another $100 million for Westinghouse’s qualified employees pension fund — Westinghouse froze contributions to that fund last year; priority claims; taxes; fees; and $800 million in bankruptcy financing debt.

The remainder, likely more than $2 billion, will go to a group of hedge funds led by the Baupost Group.

Boston-based Baupost already has an interest in the bankruptcy. It has been accumulating claims against Westinghouse at a discount.

When Toshiba agreed to pay utilities in South Carolina $2.2 billion as a parent guarantee for Westinghouse’s cost overruns there, the utilities turned around and sold that claim to Baupost for 91.5 cents on the dollar.

That means when Toshiba suddenly decided to pay the claim in full by the end of last year — as opposed to stretching it out over a number of years — Baupost instantly made $170 million on the deal.

While Toshiba paid that guarantee and another $3.7 billion to utilities in Georgia, it also reserved the right to seek that money back from Westinghouse.

Now, Toshiba is selling that right — those claims worth $5.8 billion, plus another set of claims against Westinghouse worth $2.3 billion — to Baupost for $2.2 billion.

This now makes the hedge fund one of the largest creditors in the Westinghouse bankruptcy, a distinction that gives Baupost a loud voice in how funds get distributed to creditors.

Meanwhile, Westinghouse has until Jan. 29 to file its reorganization plan and is hoping to have it approved by the end of March.

The latest developments have no impact on Westinghouse’s ground operations, spokesperson Courtney Boone said.

“Our business has not changed,” she said. “Westinghouse will continue to focus on the core areas of our business,” such as nuclear fuel, servicing existing nuclear plants, manufacturing components, “and we will continue to deploy our AP1000 technology in the engineering and procurement space.”