|
CBS to keep Thermo King
|
 |
June 18, 1997: 10:58 a.m. ET
Westinghouse to transfer refrigeration unit to media group before spin-off
|
NEW YORK (CNNfn) - Westinghouse Electric Co., parent of CBS Inc., said Wednesday it plans to keep its highly profitable refrigerated transportation unit, Thermo King Corp., when it separates its media and industrial businesses.
The move comes in light of the "numerous unsolicited inquiries that have been received" for Thermo King, which analysts expect could generate between $1.5 billion and $2.0 billion, if sold.
As a trade-off for Westinghouse Electric Co., the industrial group that will be split off this fall, approximately $1.5 billion in unfunded pension liabilities also will be transferred to the media group, making the power generation business virtually debt-free.
"Both sides benefit," said Stuart Rossmiller, analyst at Deutsche Morgan Grenfell. "Thermo King was the crown jewel. And, what's left is the power generation business with very large contracts particularly in developing markets, mainly in Asia."
In addition, because the parent company has unused net operating loss carry-forwards, Westinghouse officials said the company can use the tax credits to offset any taxable income generated by Thermo King or a capital gain from an outright sale of the operations.
"You might as well put it where you can get your tax advantage," said Jack Bergen, senior vice president of corporate relations.
Analysts concur with the strategy. "I definitely see this as being a tax-driven arrangement," Rossmiller said.
To be sure, even though Westinghouse Electric is freed of certain liabilities, it does lose a business with considerable potential. With $251 million in revenue in the first quarter, Thermo King represented 28 percent of Westinghouse Electric Co. as well as a major portion of the group's profits.
"They have a great brand name. And, as the rest of the world industrializes, they'll be in big demand," said Alexander Bing, fixed-income analyst at Donaldson Lufkin Jenrette.
-- Robert Liu
|
|
|
|
|
|
Westinghouse
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
