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

A Delaware Supreme Court ruling in favor of Chicago Bridge & Iron Company N.V. 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) TOSYY 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 SCG and Southern Co 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.”