News Archive


Delaware top court rules for Chicago Bridge in Westinghouse dispute

Posted by: Admin | Posted on: June 27th, 2017 | 0 Comments


WILMINGTON, Del The Delaware Supreme Court ruled in favor of Chicago Bridge Iron Co (CBI.N) on Tuesday in a $2 billion dispute with Westinghouse Electric Co that stems from cost overruns at a pair of unfinished U.S. nuclear power plants.

The two companies have been sparring over a 2015 deal in which Westinghouse, a unit of Japan’s Toshiba Corp (6502.T), bought the Shaw nuclear construction business of Chicago Bridge.

Pittsburgh-based Westinghouse later sought an adjustment to the closing deal price by questioning Chicago Bridge’s historical accounting, which Chicago Bridge said amounted to an attempt to recut the deal.

Westinghouse and Chicago Bridge agreed that an independent auditor would review post-closing adjustments to the deal price, a process that is underway.

Tuesday’s ruling will prevent Westinghouse from bringing to the auditor issues tied to historical accounting, which made up the bulk of Westinghouse’s claim for $2 billion as a post-closing adjustment.

Westinghouse spokeswoman Sarah Cassella said the company was reviewing the ruling.

Chicago Bridge did not immediately respond to a request for comment.

Chicago Bridge shares shot about 37 percent higher to $19.66, on track for their biggest one-day percentage gain since 2008. The stock had tumbled 50.5 percent since May 8 as investors were anxious about the legal case as well was weak earnings.

Westinghouse bought Shaw for nothing up front, but agreed to accept liabilities related to nuclear plant projects that Shaw was building in partnership with Westinghouse in Georgia and South Carolina.

Billions of dollars of cost overruns at those projects forced Westinghouse to file bankruptcy in March, and have threatened Toshiba with financial ruin.

Westinghouse sought $2 billion from Chicago Bridge as a post-closing adjustment, contending that the infrastructure firm’s historical accounting was not compliant with generally accepted accounting principles, or GAAP.

Chicago Bridge had sought $428 million from Westinghouse as a post-closing adjustment.

Chicago Bridge sued last year in Delaware’s Court of Chancery seeking a declaration that GAAP non-compliance was not an appropriate issue for the independent auditor.

The Court of Chancery ruled for Westinghouse, a decision the Supreme Court said in Tuesday’s ruling opened the way for Westinghouse to make “a wide-ranging” right to challenge Chicago Bridge’s accounting.

“We conclude that the Court of Chancery erred in interpreting the purchase agreement this way,” the Supreme Court wrote.

(Reporting by Tom Hals in Wilmington, additional reporting by Sinead Carew in New York, Delaware; Editing by Bernard Orr and Noeleen Walder)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/4fg9laNyuJg/us-toshiba-accounting-westinghouse-chgo-idUSKBN19I1Z2

Comments are closed.