Private equity firms Blackstone Group and Apollo Global Management have teamed to bid for the business of bankrupt U.S. nuclear power plant services firm Westinghouse Electric, people familiar with the situation told Reuters.
A successful deal would limit the financial impact on Westinghouse’s parent, Japan’s Toshiba. Westinghouse filed for bankruptcy on March 29, succumbing to billions of dollars of cost overruns at four nuclear reactors under construction in Georgia and South Carolina.
Westinghouse is working with investment bank PJT Partners on a sale, which is still in its early stages, the sources told Reuters last week. A deal could value Westinghouse at close to $4 billion, the sources added.
Other private equity firms are also considering forming consortia to bid for Westinghouse. Buyout firm Cerberus Capital Management is in talks with U.S. nuclear power plant component provider BWX Technologies about submitting a joint bid for Westinghouse, the sources said.
Westinghouse spokeswoman Sarah Cassella said the company had started the process to exit bankruptcy through a sale or by securing an investment, but declined to comment on the company's valuation or potential bidders. Westinghouse has previously said it is hoping to exit bankruptcy early next year.
PJT and BWX Technologies did not immediately respond to requests for comment, while Blackstone, Apollo and Cerberus declined to comment.
Construction of nuclear power plants slowed down worldwide following the 2011 Fukushima accident, and as the cost of renewable power sources and natural gas plummets, Kallanish Energy reports.
However, private equity firms see value in Westinghouse's relatively stable business of servicing nuclear power plants that are up and running. Westinghouse's business for sale has 12-month earnings before interest, taxes, depreciation and amortization of roughly $400 million, according to the sources.
In July, Toshiba agreed to pay $2.168 billion to walk away from two unfinished nuclear reactors in South Carolina being built by Westinghouse to SCANA and its partner, state-owned utility Santee Cooper.
Toshiba reached a similar agreement for $3.7 billion in June with the utilities, led by a unit of Southern Co. that own the Vogtle power project.