Citi: Court Ruling Lifts Cloud Over Chicago Bridge & Iron Shares

June 28, 2017

32

Courtesy of Benzinga.

Citi: Court Ruling Lifts Cloud Over Chicago Bridge & Iron Shares

Chicago Bridge & Iron: Truss-Worthy Rally?

A Delaware Supreme Court ruling in favor of Chicago Bridge & Iron Company N.V. (NYSE: CBI) in the company’s multibillion-dollar dispute with Westinghouse “is a significant stabilizing event for CB&I shares,” according to Citi.

Westinghouse bought CB&I’s nuclear business in 2015. Cost overruns and delays at two nuclear power plants under construction in Georgia and South Carolina led to Westinghouse’s March 29 bankruptcy filing — and a $6 billion write-down at the company’s Japanese parent Toshiba (Toshiba Corp (USA) (OTC: TOSYY) (TYO: 6502).

Westinghouse sued CB&I for $2 billion, claiming the company’s accounting of the nuclear projects was faulty.

Westinghouse’s partners in nuclear power plant construction are SCANA Corporation (NYSE: SCG) and Southern Co (NYSE: SO).

Tuesday’s ruling, which overturned the decision of a lower court, blocks Westinghouse from bringing CB&I’s historical accounting to an auditor, according to the New York Times.

CB&I stock soared after the court decision and was trading up more than 8 percent as of midday Wednesday.

“While the dispute is still ongoing, it appears that the potential liability for CB&I could be limited to a small fraction of the prior $2 billion WEC was seeking,” Citi analyst Andrew Kaplowitz said in a note. The firm has a Hold on CB&I.

The ruling increases the likelihood of a negotiated settlement, Kaplowitz said.

“Regardless of the outcome, we think today’s events move CBI closer to resolving a big question mark that has faced investors for some time.”

The Delaware Supreme Court decision “vindicates” CBI’s position that the Westinghouse claim was meritless, Chicago Bridge & Iron President and CEO Philip K. Asher said in a statement.

“CB&I looks forward to quickly resolving any remaining disputes between the parties, which we believe should be immaterial in light of the court’s ruling.”

Surprise Positive News Continues To Lift Chicago Bridge & Iron Shares