Cameco And Brookfield Renewable Form Strategic Partnership To Acquire Westinghouse Electric Company; Brookfield Renewable, Will Own A 51% Interest In Westinghouse And Cameco Will Own 49%; Total Enterprise Value For Westinghouse Is $7.875B

Author: Benzinga Newsdesk | October 11, 2022 05:04pm

Currency: U.S. dollars unless otherwise stated

• Westinghouse is an industry leader with a strong market position across the nuclear value chain
• Nuclear power expected to see significant growth driven by energy security and decarbonization trends
• Acquisition will provide opportunities to generate value and grow the business globally
   

SASKATOON, Saskatchewan and TORONTO, Oct. 11, 2022 (GLOBE NEWSWIRE) -- Cameco Corporation ("Cameco") (NYSE:CCJ, TSX:CCO) and Brookfield Renewable Partners ("Brookfield Renewable") (NYSE:BEP, BEPC, TSX:BEP, BEPC))))), together with its institutional partners ("the consortium"), are forming a strategic partnership to acquire Westinghouse Electric Company ("Westinghouse"), one of the world's largest nuclear services businesses.

Brookfield Renewable, with its institutional partners, will own a 51% interest in Westinghouse and Cameco will own 49%.

Bringing together Cameco's expertise in the nuclear industry with Brookfield Renewable's expertise in clean energy positions nuclear power at the heart of the energy transition and creates a powerful platform for strategic growth across the nuclear sector.

The total enterprise value for Westinghouse is $7.875 billion. Westinghouse's existing debt structure will remain in place, leaving an estimated $4.5 billion equity cost to the consortium, subject to closing adjustments. This equity cost will be shared proportionately between Brookfield and its institutional partners (approximately $2.3 billion) and Cameco (approximately $2.2 billion).

Brookfield Renewable is pursuing this opportunity through the Brookfield Global Transition Fund I ("BGTF I"), which is the largest fund in the world focused on the energy transition. Brookfield Renewable, which has significant available liquidity, expects to invest approximately $750 million to acquire an approximate 17% interest in Westinghouse, which will be funded through normal course funding initiatives, including asset level upfinancings and asset recycling.

Cameco currently has available liquidity and committed financing facilities for the purposes of supporting the transaction to acquire a 49% share in Westinghouse. However, Cameco will be pursuing a permanent financing mix of capital sources (cash, debt and equity), designed to preserve the company's balance sheet and ratings strength while maintaining its liquidity, prior to closing.

Brookfield Renewable is among the world's largest investors in clean energy and transition assets, with approximately 125,000 MW of operating and development capacity worldwide.

Cameco is one of the largest global suppliers of uranium fuel for nuclear energy, with extensive uranium mining and milling operations, as well as refining and conversion facilities and CANDU fuel fabrication for heavy water reactors.

Investment highlights

• An industry leader: Westinghouse services about half the nuclear power generation sector and is the original equipment manufacturer to more than half the global nuclear reactor fleet. The company has industry-leading intellectual property and a specialized workforce of roughly 9,000 employees capable of operating in highly regulated markets around the world.
• Stable and reliable revenues: Approximately 85% of Westinghouse's revenue has come from long-term contracted or highly recurring customer service provision with a nearly 100% customer retention rate given its comprehensive services offerings and position as an original equipment manufacturer, providing stability in all macroeconomic environments.
• Multiple avenues for growth: With strong growth projected in the nuclear energy market, Westinghouse is well positioned to increase business in its core fuel and services segments, execute on the growing pipeline for extending and uprating nuclear power plants, and service the rising demand for new utility-scale and modular baseload nuclear power generation.
• Compelling partnership opportunity: Cameco and Brookfield Renewable are well placed to build a global player in the clean-energy transition. The acquisition is expected to align Cameco's uranium production and fuel services capabilities with Westinghouse's downstream capabilities to potentially offer utilities a highly competitive nuclear fuel solution to deliver value for existing and new customers. This could include offering customers more efficient access to fuel supplies sourced in North America and Europe.

Mark Carney, Brookfield Vice Chair and Head of Transition Investing, said:

"Every credible net-zero pathway relies on significant growth in nuclear power. It is an essential, reliable zero-carbon technology that directly displaces fossil fuels and supports the growth of renewables by providing critical baseload to our grids. The partnership of Brookfield and Cameco will help drive forward the growth of nuclear power the world needs for its clean energy transition."

Tim Gitzel, President and CEO of Cameco, said:

"We're witnessing some of the best market fundamentals we've ever seen in the nuclear energy sector. As one of the few forms of electricity generation capable of safely, reliably and affordably producing emissions-free, baseload power, nuclear energy is becoming increasingly important in a world that prioritizes electrification, decarbonization and energy security. The opportunity to partner with Brookfield Renewable, a leader in the clean-energy space, to acquire Westinghouse is expected to create a platform for growth across the nuclear value chain. Coupled with our more than 30-year proven track record of providing secure and reliable fuel supplies to a global customer base, this transaction fits perfectly within Cameco's strategy and is expected to increase our ability to meet the growing needs of existing and new customers at a time when origin and security of supply is of significant concern. At the same time, we expect the recurring demand for Westinghouse's operating plant services and nuclear fuel will generate a strong revenue stream and add stable cash flow to complement Cameco's existing uranium and fuel services business."

Connor Teskey, CEO of Brookfield Renewable, said:

"Westinghouse has successfully refocused on providing core services to the nuclear industry and is ready for the next phase of growth. The business aligns well with our existing portfolio, delivering highly contracted and dependable revenue by serving customers who operate critical clean energy assets. Partnering with Cameco brings deep nuclear sector expertise, alongside our knowledge of energy markets and global customer base, to form a formidable champion for nuclear power. We see significant potential to grow the business and deliver on broader growth in the nuclear power sector through our strategic partnership with Cameco."

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