CORRECT: WSJ: Fluor Buys Stake In Reactor Maker NuScale Energy

Date : 10/12/2011 @ 6:58PM
Source : Dow Jones News
Stock : Fluor Corp. (FLR)
Quote : 50.58  0.09 (0.18%) @ 4:02PM

CORRECT: WSJ: Fluor Buys Stake In Reactor Maker NuScale Energy

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(A report "WSJ: Fluor Buys Stake In Reactor Maker NuScale Energy" published at 6:01 p.m. ET gave an incorrect purchase price paid by Fluor for its stake in NuScale in the second paragraph. A corrected version follows.)

 
   By Rebecca Smith 
   Of THE WALL STREET JOURNAL 
 

In a vote of confidence in the future of nuclear power, Fluor Corp. (FLR) is coming to the rescue of NuScale Energy Inc., a cash-strapped technology company that hopes to commercialize a small-scale nuclear reactor.

Fluor, the largest publicly traded engineering-and-construction firm in the U.S., is expected to announce Thursday that it has purchased a majority stake in NuScale, which is based in Corvallis, Ore., for $3.5 million. Along with a cash infusion, Fluor's total investment in the company will be $30 million.

Fluor plans to help NuScale get regulatory approval for its reactor, which at 45 megawatts is far smaller than conventional reactors that can produce more than 1,000 megawatts of power. The Department of Energy is supporting development of small reactors as an alternative to large ones that are vastly more expensive.

Smaller reactors, which can be built in factories, are also meant to be safer than such bigger reactors as the multiunit Fukushima Daiichi nuclear plant in Japan, which suffered a catastrophic accident earlier this year after a devastating earthquake and tsunami.

The March accident in Japan has led some countries to reconsider their use of nuclear power.

Fluor, which ended the second quarter with $2.2 billion of cash and an order backlog valued at $40 billion, said it is making the investment in NuScale in order to participate in a potentially important trend in the nuclear industry favoring less costly reactors.

"We're planning for the future," said John Hopkins, group executive for corporate development at Fluor, which is based in Irving, Texas.

He added that Fluor, which built about 20 large reactors in the 1970s and 1980s, wants to do more nuclear work and would probably help with engineering and construction of the NuScale units.

Fluor is buying the stake formerly held by a Connecticut hedge fund whose assets were frozen earlier this year after securities regulators accused the fund's manager of misappropriating money from investors. A lawyer for the fund manager, Francisco Illarramendi, said his client had pleaded guilty to federal fraud charges but hasn't been sentenced.

A receiver appointed by a federal judge in New Haven, Conn., has signed off on Fluor's purchase of the stake, which will also provide NuScale with working capital.

"This is a game-changing day for us," said Paul Lorenzini, chief executive of NuScale.

One of Fluor's primary competitors, Bechtel Corp., is partnering with another nuclear-technology company, McDermott International Inc.'s Babcock & Wilcox Co., which also has a design for a small, modular reactor that it hopes to get approved for commercial sale in the U.S.

Oregon State University developed NuScale's technology and licensed it to the company in exchange for a small equity stake.

Harold McFarlane, interim associate director for nuclear technology at the Idaho National Lab, said NuScale will probably be able to get its design approved by federal regulators. "I think they're in pretty good shape, technically," he said.

Some utilities are looking at small reactors as a possible replacement for coal-fired plants that are being retired to meet new pollution rules, he added.

NuScale plans to seek design certification from the Nuclear Regulatory Commission in 2013, and the company hopes to have units operating by 2020.




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