The Shaw Group Inc. (NYSE: SGR):
-- Shaw to acquire 20% interest in Westinghouse Acquisition
Companies for $1.08 billion
-- Shaw to raise $1.08 billion through private placement of
Yen-denominated limited-recourse bonds
-- Shaw to establish Commercial Agreements with Westinghouse for
Nuclear Services
-- Shaw to increase its revolving Credit Facility
The Shaw Group Inc. (NYSE: SGR) announced today that, through a
100% owned special purpose acquisition subsidiary, Nuclear Energy
Holdings, L.L.C. ("NEH"), it will join with Toshiba Corporation
("Toshiba") to acquire Westinghouse Electric Company ("Westinghouse").
Earlier in the year, Toshiba was declared the successful bidder to
acquire Westinghouse from British Nuclear Fuels Limited for $5.4
billion. Toshiba has formed two acquisition companies (a U.S. entity
and a U.K. entity - together, the "Westinghouse Acquisition
Companies") for the purpose of making the acquisition. At closing,
expected to occur in October, 2006, Toshiba will own 77% of each of
the Westinghouse Acquisition Companies, NEH 20%, and
Ishikawajima-Harima Heavy Industries Co., Ltd ("IHI") 3%. NEH's
participation in this transaction is conditioned upon successful and
timely closing of a $1.08 billion private placement bond financing and
other customary closing conditions.
NEH intends to finance its acquisition with funding it is seeking
to raise through a private placement of Japanese Yen-denominated bonds
(the "Bonds") with an approximate principal amount of $1.08 billion,
currently being marketed in Japan and outside the U.S. These
limited-recourse Bonds are expected to have a term of approximately
6.5 years. In connection with the acquisition, NEH will have an option
to sell all or part of its 20% ownership interest in the Westinghouse
Acquisition Companies to Toshiba prior to the maturity of the Bonds.
The Bonds will be secured by the assets of and 100% of the membership
interests in NEH, its shares in the Westinghouse Acquisition
Companies, along with the corresponding Toshiba option, a $36 million
letter of credit established by Shaw for the benefit of NEH (the
"Principal LC") and the Interest LCs (described below). The Bonds will
have no further recourse to Shaw. In connection with the issuance of
the Bonds, Shaw will establish one or more letters of credit for the
benefit of NEH (the "Interest LCs") in an aggregate amount to cover
Bond interest payments for a specified period and certain other
transaction costs and expenses. The initial Interest LC is expected to
be approximately $91 million in the aggregate to cover interest until
the beginning of the option period, although the exact amount will
depend upon the Yen coupon rate of the Bonds. Other than the Principal
LC and the Interest LC delivered at the closing of the Bonds, Shaw is
not required to provide any additional letters of credit or cash to or
for the benefit of NEH.
In addition, in connection with the Westinghouse transaction, Shaw
will execute a Commercial Relationship Agreement which provides Shaw
with certain exclusive opportunities to perform engineering,
procurement and construction services on future Westinghouse AP 1000
Nuclear Power Plants, along with other commercial opportunities, such
as the supply of piping for those units. Westinghouse technology forms
the basis for 63 of 104 licensed reactors in the United States and
roughly half of those worldwide. Westinghouse's AP1000 passive
Generation III design, has obtained Design Certification from the
United States Nuclear Regulatory Commission and is the current
technology selection for 10 proposed new units in the U.S.
Westinghouse and Shaw are consortium partners in proposing the AP1000
technology for 4 new reactors expected to be built in China. Shaw has
performed as architect-engineer on 17 nuclear units and is currently
completing the construction restart of the Browns Ferry Unit 1 in
Alabama for the Tennessee Valley Authority.
Shaw has received approval from its lenders to amend its revolving
credit agreement to allow for the investment in Westinghouse and to
allow for an increase in the facility from its current $750 million to
up to $1 billion. The company expects to make effective $100 million
of the approved increase, thus increasing the capacity of the facility
to $850 million, in conjunction with this amendment. Subject to
outstanding amounts, the entire credit facility, as amended, would be
available for performance letters of credit, and up to $525 million
would be available for revolving credit loans and financial letters of
credit until November 30, 2007, and $425 million thereafter. The
amendment and increase will be effective upon closing of the
Westinghouse transaction.
The bonds described above will not be or have not been registered
under the U.S. Securities Act of 1933 and may not be offered or sold
in the United States absent registration or an applicable exemption
form registration requirements.
Toshiba, a world leader in high technology, is a diversified
manufacturer and marketer of advanced electronic and electrical
products spanning information & communications equipment and systems,
digital consumer products, electronic devices and components, power
systems, industrial and social infrastructure systems, and home
appliances. Under its mid-term business plan, Toshiba is promoting
initiatives for sustained growth that will support its continued
development as a highly profitable group of companies active in both
high growth and stable growth businesses. Toshiba has 172,000
employees worldwide and annual sales of over US$54 billion. Visit
Toshiba's web site at www.toshiba.co.jp/index.htm
Established in 1853, IHI is one of Japan's leading heavy apparatus
manufacturers, active in domains as diverse as airplane engines, power
generation plants, and shipbuilding. Toshiba and IHI have a long
established business relationship, especially in the nuclear power
plant businesses. IHI manufactured and supplied reactor pressure
vessels for all the BWR nuclear power systems in Japan where Toshiba
was the prime contractor. Toshiba will continue to reinforce its
relationship with IHI, seeking to extend their successful track record
to the global market.
Westinghouse Electric Company is the world's pioneering nuclear
power company and is a leading supplier of nuclear plant products and
technologies to utilities throughout the world. Today, Westinghouse
technology is the basis for approximately one-half of the world's
operating nuclear plants.
Shaw will host a conference call to discuss the planned
acquisition of 20% of Westinghouse. The call is scheduled for today,
Wednesday, October 4, 2006 at 9:00 a.m. EDT (8:00 a.m. CDT). A live
webcast of the conference call will be available on the Investor
Relations page of Shaw's web site at www.shawgrp.com. A replay of the
call will be available via the Company's website approximately one
hour after the call has been completed. You may also access the replay
by dialing (800) 633-8284 and using the reservation number: 2130-5981
or by retrieving the replay from the Shaw web site.
The Shaw Group Inc. is a leading global provider of engineering,
procurement, construction, technology, maintenance, fabrication,
manufacturing, consulting, remediation, and facilities management
services for government and private sector clients in the energy,
chemical, environmental, infrastructure and emergency response
markets. Headquartered in Baton Rouge, Louisiana, with over $4 billion
in annual revenues, Shaw employs approximately 22,000 people at its
offices and operations in North America, South America, Europe, the
Middle East and the Asia-Pacific region. For further information,
please visit Shaw's website at www.shawgrp.com.
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for certain forward-looking statements. The statements
contained herein that are not historical facts (including without
limitation statements to the effect that the Company or its management
"believes," "expects," "anticipates," "plans," or other similar
expressions) and statements related to revenues, earnings, backlog, or
other financial information or results are forward-looking statements
based on the Company's current expectations and beliefs concerning
future developments and their potential effects on the Company. There
can be no assurance that future developments affecting the Company
will be those anticipated by the Company. These forward-looking
statements involve significant risks and uncertainties (some of which
are beyond our control) and assumptions and are subject to change
based upon various factors. Should one or more of such risks or
uncertainties materialize, or should any of our assumptions prove
incorrect, actual results may vary in material respects from those
projected in the forward-looking statements. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. A description of some of the risks and uncertainties that
could cause actual results to differ materially from such
forward-looking statements can be found in the Company's reports and
registration statements filed with the Securities and Exchange
Commission, including its Form 10-K and Form 10-Q reports, and on the
Company's web-site under the heading "Forward-Looking Statements".
These documents are also available from the Securities and Exchange
Commission or from the Investor Relations department of Shaw. For more
information on the company and announcements it makes from time to
time on a regional basis visit our web site at www.shawgrp.com.
