Brookfield Asset Management Unit Closes Deal to Sell 49% of Westinghouse to Cameco

Brookfield Business Partners bought the nuclear tech company out of bankruptcy in 2018 for $4.6 billion, while this deal values the company at $8.2 billion.

Brookfield Business Partners closed the sale of 49% of nuclear technology services company Westinghouse Electric Co. to Canadian uranium mining company Cameco Corp. last week, with Brookfield’s publicly listed affiliate, Brookfield Renewable Partners, taking a majority stake at 51%.

The total enterprise value of the deal is $7.9 billion, which was adjusted for working capital balances at the close and resulted in a final enterprise value of $8.2 billion. Westinghouse, however, has $3.8 billion in outstanding debt commitments stemming from its 2017 Chapter 11 bankruptcy, which reduced the equity cost of the acquisition. Late last week, the companies announced that they received all required regulatory approval for the sale.

Brookfield Business Partners, which is $850 billion Brookfield Asset Management’s business services and industrials unit, and its partners acquired Westinghouse out of bankruptcy in early 2018 for approximately $4.6 billion. Prior to the sale, Brookfield Business Partners’ economic interest was approximately 44%, with its partners owning the remainder of the company. Brookfield Business Partners first announced that it agreed to sell Westinghouse in October 2022.

“Since first announcing this deal a year ago, we believe the business prospects for Westinghouse have significantly improved,” Cameco CEO Tim Gitzel said in a statement. “The sustained and positive momentum for nuclear energy has been undeniable, as countries and companies around the world strive to meet their net-zero commitments and growing energy needs through clean and secure supply.”

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According to Brookfield Business Partners, following its acquisition of Westinghouse more than five years ago, it appointed a new management team and repositioned the business by altering its organizational structure, refocusing its product and service offerings, optimizing the global supply chain and investing in new technology. As a result, according to Brookfield, Westinghouse’s profitability has nearly doubled.

“We have significantly enhanced the business’ operations over the past four years, increasing its margins and strengthening its global leadership position,” Brookfield Business Partners CEO Cyrus Madon said in a statement in 2022 when the sale was announced. At the time, the company said its expected proceeds from the sale would be approximately six times its invested capital, with a 60% internal rate of return and $4.5 billion of total profit when combined with distributions received.

According to Brookfield Business Partners, it expects to generate approximately $1.8 billion in proceeds from the sale of its 44% stake in Westinghouse, with the remainder distributed to its institutional partners.

Cameco announced its plans to finance its share of the acquisition using all of its $600 million term loan, which will be drawn down at closing, along with available cash. It will not use the $280 million bridge commitment it secured concurrently with the acquisition agreement, adding that the commitment will be terminated.

As a limited partnership, Westinghouse will be governed by a six-person board of directors, three appointed by Brookfield Renewable Partners and three by Cameco. According to the announcement, decisions on “certain reserved matters … such as the approval of the annual budget, require the presence and support of both Cameco and Brookfield appointees to the board.”

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Tags: Brookfield Asset Management, Brookfield Business Partners, Brookfield Renewable Partners, Cameco Corporation, Cyrus Madon, sale, Westinghouse

Senators from both parties introduced the Disclosing Investments in Foreign Adversaries Act last week. The bill would require private funds and their advisers to disclose investments in “countries of concern,” specifying China, Iran, North Korea and Russia.

Senators Bob Casey, D-Pennsylvania, and Rick Scott, R-Florida, are the original sponsors of the bill. Both senators expressed concern that Americans’ retirement savings are being invested in China and other countries seen as adversaries: “Currently, private equity, hedge funds, and venture capital firms can invest Americans’ savings and pensions in China without the American people’s knowledge,” stated a release from the senators.

Scott also expressed concern about the portfolios of other institutional investors: “Without the ability for the U.S. public to monitor investments made by large private equity and venture capital funds in foreign economies, American states, municipalities, universities, unions, and pension funds could unknowingly be investing in the United States’ economic competitors like China and Russia.”

If passed, the bill would require private funds such as hedge, private equity and venture capital funds to disclose annually their holdings in these countries. Advisers to those funds would have to do the same on forms PF and ADV. The disclosures would need to include the percent of that fund’s assets held in countries of concern, the entities in which the funds are invested and the purpose of those investments.

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The Securities and Exchange Commission would be required to use those specific disclosures to issue public summaries of those investments on an annual basis.

Though the bill targets four countries, it is one of many specifically intended to curtail investment in China, especially in industries considered critical to U.S. national security, and is framed as such by its sponsors.

Scott, for his part, has introduced at least two other bills requiring special disclosures related to Chinese investment. The Transaction and Sourcing Knowledge Act, introduced in March, would require public firms to disclose any business dealings in Xinjiang Province and any transactions with restricted Chinese companies. The Simply Automatic Filing Extensions Act, also introduced in March, would require public companies to disclose any financial support they receive from China and any positions held currently or previously by their directors with the Chinese government or Chinese Communist Party.

The administration of President Joe Biden has also tightened restrictions this year on investing or doing business with several of the same countries as the bill targets. Early in November, the Department of the Treasury increased sanctions on individuals and organizations providing Russia with technology and equipment from third countries that aid the Russian military.”

Tags: China, Emerging Markets, Hedge Fund, Hermes Private Equity, private funds