Author Topic: CBI - Chicago Bridge & Iron  (Read 150008 times)

MrB

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Re: CBI - Chicago Bridge & Iron
« Reply #20 on: November 28, 2014, 03:17:07 AM »
From Oglethorpe's (30% Vogtle owner) latest Q (p.18)
http://www.opc.com/oracle_cons/groups/public/@opc-web/documents/webcontent/ct_001484.pdf

Stone & Webster=CBI sub

"Contingencies and Regulatory Matters.
Management does not anticipate that the liabilities, if any, for any current proceedings against us
will have a material effect on our financial condition or results of operations. However, at this
time, the ultimate outcome of any pending or potential litigation cannot be determined.

a. Nuclear Construction
In April 2008, Georgia Power Company, acting for itself and as agent for us, the Municipal
Electric Authority of Georgia, and the City of Dalton, Georgia (collectively, the Co-owners), and
Westinghouse Electric Company LLC and Stone & Webster, Inc. (collectively, the Contractor)
entered into an engineering, procurement, and construction agreement to design, engineer,
procure, and construct two AP1000 nuclear units with electric generating capacity of approximately
1,100 megawatts each and related facilities, structures, and improvements at Plant Vogtle (Vogtle
Units No. 3 and No. 4).
Under the agreement, the Co-Owners and the Contractor have established both informal and
formal dispute resolution procedures in order to resolve issues arising during the course of
constructing a project of this magnitude. Georgia Power, on behalf of the Co-owners, has
successfully initiated both formal and informal claims through these procedures, including ongoing
claims. When matters are not resolved through these procedures, the parties may proceed to
litigation. The Contractor and the Co-owners are involved in litigation with respect to certain
claims that have not been resolved through the formal dispute resolution process.
Current litigation relates to costs associated with design changes to the Westinghouse AP1000
Design Control Document (DCD) and costs associated with delays in the project schedule related
to the timing of approval of the DCD and issuance of the combined construction permits and
operating licenses by the Nuclear Regulatory Commission. In July 2012, the Co-owners and
Contractor began negotiations regarding these costs, including the assertion by the Contractor that
the Co-owners are responsible for these costs under the terms of the agreement. On November 1,
2012, the Co-owners filed suit against the Contractor in the U.S. District Court for the Southern
District of Georgia, seeking a declaratory judgment that the Co-owners are not responsible for
these costs. Also on November 1, 2012, the Contractor filed suit against the Co-owners in the U.S.
District Court for the District of Columbia alleging the Co-owners are responsible for these costs.
In August 2013, the U.S. District Court for the District of Columbia dismissed the Contractor’s
suit, ruling that proper venue is the U.S. District Court for the Southern District of Georgia. In
September 2013, the Contractor appealed the decision to the U.S. Court of Appeals for the
District of Columbia.
The portion of the additional costs claimed by the Contractor in its initial complaint that would be
attributable to us, based on our ownership interest, was approximately $280 million in 2008 dollars
with respect to these issues. The Contractor has also asserted that it is entitled to further schedule
extensions. On May 22, 2014, the Contractor filed an amended counterclaim to the lawsuit pending
in the Southern District of Georgia alleging that (i) the design changes to the DCD imposed by
the Nuclear Regulatory Commission have delayed module production and the impacts to the
Contractor are recoverable by the Contractor under the agreement and (ii) the changes to the
basemat rebar design required by the Nuclear Regulatory Commission caused additional costs and
delays recoverable by the Contractor under the agreement. The Contractor did not specify in its
amended counterclaim claimed amounts relating to these new allegations but such claimed
amounts could be substantial. Georgia Power, on behalf of the Co-owners, has not agreed with
either the proposed cost or schedule adjustments or that the Co-owners have any responsibility for
costs related to these issues.

While litigation is ongoing and Georgia Power and the Co-owners intend to vigorously defend
their positions, Georgia Power and the Co-owners also expect negotiations with the Contractor to
continue with respect to cost and schedule during which time the parties will attempt to reach a
mutually acceptable compromise of their positions.
If any or all of these costs are ultimately imposed on the Co-owners, we will capitalize the costs
attributable to us. As of June 30, 2014, no material amounts have been recorded related to this
claim. Additional claims by the Contractor or Georgia Power, on behalf of the Co-owners, are also
likely to arise throughout construction."

Allegedly  S&W can recover from Westinghouse what they cannot recover from the owners. Anyone that can provide more color on this?


MrB

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Re: CBI - Chicago Bridge & Iron
« Reply #21 on: November 28, 2014, 03:55:29 AM »

MrB

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Re: CBI - Chicago Bridge & Iron
« Reply #22 on: November 28, 2014, 04:46:33 AM »
For those who, like me, needs quite a bit of education on LNG
http://www.oxfordenergy.org/wpcms/wp-content/uploads/2014/02/NG-83.pdf

MrB

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Re: CBI - Chicago Bridge & Iron
« Reply #23 on: November 28, 2014, 06:19:14 AM »
Current lawsuit/dispute amounts between CBI and owners on all three nuclear projects. Sources in brackets.

Vogtle $933m (10k & CC)
VC Summer $244m (CC)
Levy $512m (CC/news reports)

I don't think these should be treated as anything more than ballparks. However, costs are real and someone is one the hook.

KCLarkin

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Re: CBI - Chicago Bridge & Iron
« Reply #24 on: November 28, 2014, 07:12:28 AM »
Current lawsuit/dispute amounts between CBI and owners on all three nuclear projects. Sources in brackets.

Vogtle $933m (10k & CC)
VC Summer $244m (CC)
Levy $512m (CC/news reports)

I don't think these should be treated as anything more than ballparks. However, costs are real and someone is one the hook.

Are those amounts just what CBI claims? Or does that include any Westinghouse et al claims?

MrB

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Re: CBI - Chicago Bridge & Iron
« Reply #25 on: November 28, 2014, 07:48:11 AM »
Current lawsuit/dispute amounts between CBI and owners on all three nuclear projects. Sources in brackets.

Vogtle $933m (10k & CC)
VC Summer $244m (CC)
Levy $512m (CC/news reports)

I don't think these should be treated as anything more than ballparks. However, costs are real and someone is one the hook.

Are those amounts just what CBI claims? Or does that include any Westinghouse et al claims?

933m is what CBI is suing for in the initial complaint. More being added. Not sure what being countered for.
244m is estimates of disputed amount from various parties involved.
512m Westinghouse v Duke

As mentioned in the case of Vogtle it is said (rumour) that CBI can recover from Westinghouse if the owners do not pay. I think they have to try and get the money first and if unsuccessful then they can turn to Westinghouse.

MrB

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« Last Edit: December 01, 2014, 08:56:31 AM by MrB »

physdude

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Re: CBI - Chicago Bridge & Iron
« Reply #27 on: December 01, 2014, 09:46:13 AM »
The FTC news seems to be 6 years old! I am not sure I get the relevance to the current company.

MrB

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Re: CBI - Chicago Bridge & Iron
« Reply #28 on: December 03, 2014, 07:09:02 AM »
The FTC news seems to be 6 years old! I am not sure I get the relevance to the current company.
If that is your measure of relevance then note that the case was opened in 2002 and relates to an acquisition CBI made in Feb 2001. So almost 14 years ago.

Buffetteer

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Re: CBI - Chicago Bridge & Iron
« Reply #29 on: December 05, 2014, 07:58:07 PM »
Ted or Todd have to be picking up more CBI this quarter, don't you think?

In Q1, 2013 they buy at an estimated average of $52/share.
In Q2, 2013 they add about 50% at $58/share.
Q2, 2014 add 10% at $72/share.

I know CBI is dependent on the price of oil, but at 8.5x earnings (compared to S&P's 18.7) you would assume there is enough of a margin of safety for them to add to their position. Price has been beaten down due to a couple analyst downgrades, but the company recently confirmed it's 2014 guidance and projected earnings between $5.75 - $6.05 for 2015.