Westinghouse revamps industrial spinoff plans

NEW YORK — Westinghouse Electric Corp. has shifted gears on its plan to spin off industrial assets, and will now group crown jewel Thermo King as part of the media business to be renamed CBS Corp.

But the move is likely to be a temporary measure, with Thermo King widely expected to be sold for $2.5 billion or more. It’s apparently designed as an accounting move, both to shield remaining industrial assets from pension liabilities and to allow tax credits assigned to the media business to offset a gain from the sale of Thermo King, a leading refrigerated trucking business.

“I think the restructuring in this way is a modest positive,” said Frank Bodenchak, a Morgan Stanley analyst. By retaining Thermo King with media businesses, “it makes the story a little less clear to a pure-play media analyst, but on the other hand, if they’re going to sell it we can all understand the value.”

The change in plans, said chairman Michael Jordan in a statement, “reflects the numerous unsolicited inquiries that have been received” since the spinoff plan was announced last November, and the subsequent increase in its estimated value. The spinoff is still due to be completed by Sept. 30.

Under the original plan, Thermo King would have remained with other industrial businesses, with as much as a 20% stake spun off in a new public offering.

The industrial sector will now lose $180 million in annual cash flow contribution from Thermo King, but the figure is more than offset by a $375 million a year pension liability, extending for five years, that will now remain with CBS or more likely be sold with the unit.

Ultimately, CBS’ $2 billion in tax credits, known as net operating loss carryforwards, will offset taxes on the gain from Thermo King’s expected sale, a credit unavailable to the industrial company.

Westinghouse shares closed Wednesday up 62.5¢ to $22.63, a new 52-week high.

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