Cameco, Brookfield form $80B (U.S.) nuclear partnership

Executive Summary

• Cameco Corp. and Brookfield Asset Management have entered into a binding term sheet with the U.S. Department of Commerce to establish a strategic partnership aimed at accelerating the global deployment of Westinghouse nuclear reactor technologies.
• The agreement involves the U.S. government facilitating financing and permitting for new Westinghouse reactors in the U.S., with an aggregate investment value of at least $80 billion (U.S.).
• The partnership includes a unique participation interest for the U.S. government, which may vest into a warrant to purchase equity in Westinghouse if an IPO occurs by January 2029 with a valuation of $30 billion or more.

Key Details

• Parties Involved: Cameco Corp., Brookfield Asset Management (owners of Westinghouse Electric Company), and the United States Department of Commerce.
• Transaction Structure: Binding term sheet for a strategic partnership to accelerate deployment of Westinghouse nuclear reactor technologies.
• Investment Value: Aggregate investment value of at least $80 billion (U.S.) for new Westinghouse nuclear reactors to be built in the U.S.
• U.S. Government Role: The government will arrange financing and facilitate permitting and approvals for new reactors.
• Strategic Goals:
  • Generate reliable and secure power for the American grid.
  • Power significant data centre and compute capacity to drive growth in artificial intelligence in the U.S.
  • Reinvigorate supply chains and the nuclear power industrial base in the U.S. and abroad.
• Participation Interest Terms:
  • The U.S. government is granted a participation interest entitling it to 20% of cash distributions in excess of $17.5 billion (U.S.) made by Westinghouse after the interest is granted.
  • Vesting Condition: The interest vests only if the U.S. government makes a final investment decision and enters definitive agreements to complete construction of new Westinghouse reactors in the U.S. with an aggregate value of at least $80 billion (U.S.).
• IPO and Warrant Mechanism:
  • If the participation interest vests and Westinghouse undergoes an IPO on or prior to January 2029 with a valuation of $30 billion (U.S.) or more, the U.S. government can require an IPO.
  • Upon IPO, the participation interest converts into a warrant with a five-year term.
  • The warrant allows the purchase of equity securities equivalent to 20% of the public value of the IPO entity at exercise, after deducting $17.5 billion (U.S.) from the public value.
• Operational Impact:
  • Westinghouse plans to commence project execution and initiate orders for critical equipment with long lead times upon closing.
  • Leverages nuclear industry supply chains established during the construction of Vogtle units 3 and 4.
  • Expected to accelerate growth in Westinghouse's energy systems segment during construction and its core fuel fabrication and reactor services business for the life of the reactors.
• Cameco's Position: Cameco is positioned to benefit from anticipated acceleration of nuclear fuel demand growth as a supplier of uranium and nuclear fuel services/components.
• Regulatory Status: Transactions are subject to required regulatory approvals and customary conditions. Definitive agreements are expected to replace the binding term sheet.

Notable Quotes

• "We are pleased to see the U.S. government make this commitment to expanding nuclear power capacity using Westinghouse's proven technology. We expect that our highly successful partnership with Brookfield as owners of Westinghouse will be further strengthened through this strategic collaboration with the U.S. government," said Tim Gitzel, chief executive officer of Cameco.
• "At the centre of this new partnership is value creation. When coupled with the May 23, 2025, executive orders, we believe the U.S. government's participation in the partnership creates the right incentives to deploy its full suite of tools behind the construction of Westinghouse reactors, including financial, regulatory, policy and diplomatic support."