Presentations & Events
- ended March, 2007
Presentation of the Acquisition of Westinghouse
- October 17, 2006
- PDF [432KB/23 pages]
Q & A Session
- Q1. What do you think about the increased investment ratio to 77%?
- Following negotiations, Toshiba's investment ratio is 77% at the time of the completion of acquisition. But Toshiba is still in discussions with several other potential partners on capital participation in terms of: 1. long-term business strategy; 2. shared market vision; and 3. complementary relations and maximizing synergy in conducting business. If we decide on any new companies to participate, we will announce it accordingly.
- Q2. You explain that Toshiba has no intention to raise equity finance. Isn't equity finance better?
- We are not saying that Toshiba definitely won't raise equity finance. But by estimating future cash flows, we determined that the acquisition could be managed with debt and that there is no need to raise equity finance.
- Q3. The amount of investment is now 100 billion yen higher than that envisaged in your February announcement. How will you finance that?
- We will move short-term debt into long-term funding. Based on our on-going cash flow plan, we will decide the required amount, but the current estimate of long-term funding is about 400 billion yen or slightly less. Toshiba has no intention of raising equity finance.
- Q4. Do you think that a 17-year repayment period is long or short?
- The nuclear energy business is a long-term business in terms of timeline, and we regard the value of new plants as important in this acquisition. We see a repayment period of 17 years as reasonable. Today, we announced the repayment period of 17 years, which is more specific than the 15 to 20 years we previously announced before.
- Q5. Shaw's press release indicates that it will have exclusive right to engineering, procurement and construction service (EPC) for Westinghouse nuclear power plants. Does this mean that the entire engineering process for all future generation reactors will be handled by Shaw?
- Shaw will have certain exclusive rights to participate in projects as a partner. However, Shaw's rights are mainly in such areas as construction and piping work, where it has competitive strengths. There can be exceptions, reflecting client's requirements and Shaw's abilities to handle individual projects.
- Q6. According to Shaw's press release, Shaw has right to ask to Toshiba to buy Shaw's 20% ownership interest. Why does Toshiba grant such a right?
- In establishing the basis for a long-term business relationship between Toshiba and its partners, it was decided to include a provision to prevent stock transfers to third parties for a period of six years. From the perspective of protecting minority shareholders, the agreement gives certain rights to partners that include a put option. We don't see that right as a special one, since joint venture agreements often include this kind of option.
- Q7. Could you tell us your plan for developing your nuclear energy business in China?
- Although we don't have detailed information, we understand that the Chinese government intends to make decision on four plants from among 30 plant projects within the year. Announcement is expected by the end of this year. If the project is awarded through Westinghouse, Toshiba Group will make every effort to meet the requirements of the Chinese government.
- Q8. You explained that Toshiba is continuing to discuss potential partnerships with other companies. When do you expect to complete the discussions?
- Toshiba is now in discussions with several companies, both in Japan and overseas. We can't disclose names or numbers, and we cannot specify timing, since this is a matter of negotiation.
- Q9. What do you think of a relationship with Mitsubishi Heavy Industries (MHI)?
- Although we are not aware of MHI's thoughts, we intend to proceed with discussions to establish a friendly relationship, in consideration of the contract between Westinghouse and MHI, and past business. At the time of the completion of the acquisition, we have not yet opened discussions with MHI.
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