Engineering and construction company The Shaw Group Inc. will sell its minority investment in nuclear power plant company Westinghouse Electric Co. LLC back to Toshiba Corp.
The sale will help Shaw shed some debt and strengthen its balance sheet. But it also means that there will no longer be any U.S. investors in Westinghouse, which is more than 100 years old and is based in Monroeville, Pa.
While Toshiba is taking a larger stake in Westinghouse, the Japanese company said it "remains open to the idea" of inviting in new investors if they share its long-term vision and business strategy for Westinghouse.
Toshiba said several companies have already expressed interest in possible investments.
Shaw said that it is still under contract with Westinghouse for six U.S. nuclear power plants and four plants under construction in China. The Baton Rouge, La., company also expects to continue to work with Westinghouse and Toshiba on certain projects.
Westinghouse said in a statement that Shaw's sale of its minority stake will not impact any of the U.S. plants or the ones under construction in China. The plants in China are expected to be operational starting in 2013.
Shaw subsidiary Nuclear Energy Holdings LLC obtained a 20 percent stake in Westinghouse in October 2006 for $1.08 billion, while Toshiba purchased a 77 percent interest from the U.K.'s British Nuclear Fuels PLC for $4.2 billion and Japanese heavy machinery maker IHI Corp. bought the remaining 3 percent. Toshiba later sold 10 percent of its interest to Kazatamprom, a company based in Kazakhastan.
Once Shaw sells its Westinghouse stake, Toshiba will have an 87 percent interest in Westinghouse.
Shaw didn't cite a price for its Westinghouse stake. But it said by selling its stake, it would get rid of about $1.7 billion in debt. Recently, the drop in the U.S. dollar versus the yen has negatively affected the Westinghouse segment, because Shaw used bonds denominated in yen to finance its investment in the business.
Nuclear Energy plans to exercise put options to sell its Westinghouse investment back to Toshiba. If it receives the necessary consents, Nuclear Energy will formally notify Toshiba and the shares will transfer 90 days thereafter. Funds received must be used to redeem bonds on the next interest payment date.
If Nuclear Energy does not receive the necessary consent to grant the bonds early, the put options will be automatically exercised on Oct. 6, 2012 for cash settlement on Jan. 4, 2013. Proceeds from the sale will be used to repay bonds maturing March 15, 2013.
Toshiba said the acquisition's closing date has yet to be determined.
Shaw's shares added $1.19, or 5.5 percent, to $23.02 in midday trading Tuesday. The stock has traded between $20.24 and $41.62 over the last year.