‘We, Westinghouse, cannot fail’: CEO, new documents give fuller picture of business
A few minutes after 3 a.m. March 29, José Emeterio Gutiérrez — whose signature as interim CEO of Westinghouse Electric Co. was all over bankruptcy documents filed at that early hour — received an email with a puzzling sentiment: “Congratulations.”
“It’s 3 a.m. in the morning. Probably, my English is gone,” Mr. Gutiérrez, a Spanish native, recalled at an industry conference last month. “This guy is crazy.”
The unidentified well-wisher followed up the email with a call. “You have been suffering a lot in the past weeks with a lot of different issues,” he said, according to Mr. Gutiérrez. “You have an opportunity to restructure this business.”
“I said, ‘OK. Thank you. We’ll see,” Mr. Gutiérrez replied.
In his first public remarks since the Cranberry-based nuclear firm was plunged into bankruptcy by delays and billions of dollars in cost overruns at nuclear power plant construction projects in Georgia and South Carolina, Mr. Gutiérrez said the future of the industry relies on companies like Westinghouse staying viable and vibrant.
“We, Westinghouse, cannot fail,” he told an audience of peers, other nuclear firms and suppliers who are watching with trepidation the company’s travails in bringing its first U.S. AP1000 nuclear plants to market.
“We have to build these reactors,” he said. “Otherwise, the future is going to be compromised.”
Mr. Gutiérrez said other countries — he emphasized countries, not companies, because Westinghouse’s major competitors are subsidiaries of governments such as Russia, China and South Korea — cannot be allowed to usurp the leadership of the U.S. nuclear industry.
“We, Westinghouse,” he said, “in a very humble way, we are trying to do our piece.”
Construction at a junction
Mr. Gutiérrez has said the company plans to finish its turnaround plan by the end of July.
As he spoke May 24, Westinghouse’s bankruptcy consultants were putting the finishing touches on thousands of pages of financial statements that were made public a few days later.
The sheer size of the effort can be seen by the bankruptcy fees disclosed — more than $15 million was paid to lawyers and consultants in the three months before the filing in late March.
Millions more were paid to Citibank, which helped Westinghouse get its $800 million debtor-in-possession financing — a loan to keep the company’s domestic and international businesses operating as it reorganizes.
The recently released disclosures shine a light on the massive scope of the Westinghouse organization, as seen through rosters of its contracts, vendor lists, environmental liabilities, assets and other markers.
With an estimated $5 billion in assets — almost 20 percent of that in the form of intellectual property — and $618 million in known liabilities, the financial documents show a company that, were it not for the construction projects, might be something to brag about.
The potential losses from breaking those construction contracts, which Westinghouse intends to do, or from other delays on the projects and disputes with its former construction partner aren’t yet known, but are estimated to be in the billions.
Nor is the fate of those projects much clearer than when Westinghouse filed for bankruptcy protection.
On May 16, Westinghouse reached a tentative agreement with Southern Co., the parent of the utility that commissioned the Plant Vogtle AP1000 projects in Georgia. The deal called for Southern to take over responsibility for completing the construction. The two parties were supposed to finalize a path forward by Sunday, but they were still negotiating Monday.
Parallel discussions are ongoing between Westinghouse and Scana Co., which owns the two AP1000 units under construction at V.C. Summer in South Carolina.
It has been rumored for months that Fluor Corp. and Bechtel Corp., two of the country’s largest engineering and construction firms, might be preparing bids to take over the projects in Georgia and South Carolina.
Fluor was brought in by Westinghouse more than a year ago to straighten things out after the nuclear firm’s ill-fated takeover of the nuclear construction firm that was previously in charge of that effort, Stone & Webster.
Bechtel, according to the recently filed financial statements, has also been on the job since at least January, as evidenced by two “staff augmentation contracts,” one at each site.
“We hope that the reactors will be built and we hope they did a better job than we did,” Mr. Gutiérrez said at the Nuclear Energy Institute event last month.
In new documents, Westinghouse disclosed a litany of lawsuits, including those stemming from its AP1000 construction projects.
It also listed conflicts that may at some point lead to more lawsuits, including potential breach-of-contract claims against Curtiss-Wright Electro-Mechanical Corp., whose Cheswick plant makes reactor coolant pumps. Defects in coolant pumps delivered to Westinghouse’s AP1000 projects in China and in the U.S. delayed progress there.
Westinghouse indicated it is mulling an action against its Japanese parent company, Toshiba Corp., for breach of contract.
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