Westinghouse reaches deal to tap $800M in loans during bankruptcy

Dive Brief:

Westinghouse Electric told a bankruptcy court in New York that it has reached a deal to borrow $800 million, Reuters reports.
Westinghouse assured the court that the debtor in possession financing would not be used for the company’s overseas operations, which have not been placed into bankruptcy.
An attorney for Westinghouse told the court that the funds from the loan would be used to complete its business plan by July 27, according to Reuters.

Dive Insight:

Westinghouse had earlier indicated it was able to secure $800 million in debtor-in-possession (DIP) financing to allow it to continue operating until it is able to put together a bankruptcy plan and exit bankruptcy.

Delays and cost overruns associated with the Vogtle nuclear reactor being built by Georgia Power and the V.C. Summer nuclear project being built by SCANA prompted Westinghouse to declare bankruptcy for its U.S. operations.

Both utilities managed to strike interim agreements with Westinghouse earlier this month, buying time for the companies to decide whether or not to take over construction.

The company’s Asian and European operations continue, but are now hampered by their inability to use U.S. resources. That has raised worries among some creditors who are concerned that the DIP financing could be siphoned off to those operations. Some utilities have also expressed concerns about Westinghouse posting its intellectual property as collateral against the DIP facility. Others are also concerned that $800 million will not be sufficient for the company to follow through on the projects already under construction in the U.S.

Those concerns slowed the progress on finalizing the DIP. The first $350 million of the loan was approved in March. The bankruptcy judge has now approved the final $450 million, though Reuters reports that he wants to review the loan agreement.

Last month, Bloomberg reported that private equity firm Apollo Global Management is beating out Goldman Sachs in the competition to provide DIP financing for Westinghouse. Providers of DIP financing usually are first in line to get repaid in bankruptcy proceedings and often earn high interest rates.