Courtesy of Benzinga.
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.”
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Surprise Positive News Continues To Lift Chicago Bridge & Iron Shares
Latest Ratings for CBI
Date | Firm | Action | From | To |
---|---|---|---|---|
Mar 2017 | Argus Research | Downgrades | Buy | Hold |
Dec 2016 | Argus Research | Initiates Coverage On | Buy | |
Sep 2016 | Credit Suisse | Maintains | Outperform |
View More Analyst Ratings for CBI
View the Latest Analyst Ratings
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