B&W LOOKING TO GIVE UP MAJORITY OWNERSHIP IN MPOWER

Babcock & Wilcox announced yesterday that it is looking to sell off a majority stake in its mPower small modular reactor program to outside investors. In a call with investors, B&W President and CEO James Ferland said additional investment is needed in mPower to “move the technology forward with speed and provide the financial resources and depth to support the global development of this game-changing technology,” noting that B&W had believed bringing a set of minority investors was not the right approach. “Our efforts over the past nine months to bring in additional investors have generated a lot of interest and identified a couple of very serious potential investors. Through discussions with these interested parties, we realized that sequentially adding a series of minority investors poses a number of practical challenges, and more importantly, it isn’t the best way to structure GmP to ensure the long-term success of mPower in the global market. Consequently, we have decided that now is the right time to seek a partner or partners to acquire a majority share of GmP,” Ferland said.

Currently, B&W owns 90 percent of Generation mPower, LLC, with the remaining 10 percent held by Bechtel. According to Ferland, B&W is looking to reduce its stake to 15-20 percent, with the sale process expected to be completed by the latter half of 2014. When asked the estimated value of B&W’s stake in mPower, Ferland said, “It’s relatively difficult to put a dollar figure on it. We clearly have a business case, and we can estimate what we think the overall venture is worth in the next 30 years. But it’s a little bit difficult to translate that back into what is somebody willing to pay for the investment today as it’s still in a development stage. We know roughly that we have $350 million or $360 million invested to date in the program, so that’s probably not a bad place to at least start discussions. But we’ll see what the market thinks it’s worth in the next few months.”

As part of the sale, Ferland said, B&W will transfer the mPower technology to the new majority owners, but plans to retain the rights to manufacture the reactor module and fuel. “We just want to focus on what we think our best value add is to mPower, which really is the manufacturing arena and in the fuel arena. We think we can both help in the short run, and we think that’s a great place to be in the long run as we watch this technology emerge across the world,” he said. “In regard to the technology itself, we, of course, would like to hold on to it. We think it’s valuable. That said, if we’re trying to add a majority partner or perhaps a combination of investors that will take majority interest, the reality is they are not going to want to take majority interest and compensate us fairly if they don’t have some amount of control over the core technology. So the original idea was that B&W would hold on to the IP and then we license it into Generation mPower. If, in the long run, we expect our equity position to be in the 20 percent range, it probably makes more sense and it helps us secure investors if we are willing to transfer that technology and ultimately, give the investor group enough control that they have comfort. So that’s the logic,” Ferland added.