ML20005E302
| ML20005E302 | |
| Person / Time | |
|---|---|
| Site: | 07000036, 07001100 |
| Issue date: | 12/07/1989 |
| From: | Mckenna E Office of Nuclear Reactor Regulation |
| To: | Rouse L NRC OFFICE OF NUCLEAR MATERIAL SAFETY & SAFEGUARDS (NMSS) |
| References | |
| 26164, NUDOCS 9001050031 | |
| Download: ML20005E302 (3) | |
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MEMORANDUM FOR: Leland C. Rouse, Chief r8
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- Division of Industrial and Medical Nuclear Safety C
-Office of Nuclear' Material Safety and Safeguards i
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- FROM:.
- Eileen M. McKenna, Acting Chief.
m Policy Development and Technical Support Branch A
Program Managenent, Policy Development' and Analysis Staff Office of Nuclear Reactor Regulation e
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SUBJECT:
PTSB-REVIEW 0F PROPOSED PURCHASE OF COMBUSTION g
ENGINEERING SY ASEA BROWN B0 VERI Q
-This responds 'to a, request from your. staff to review the subject proposed-
. purchase.. We have evaluated the advanced copy of a letter to Mr. James Taylor, with attachments, from Combustion Engineering (C-E). C-E stated in this D1etter that, afterfits merger with Asea Brown Boveri (ABB), it. currently intends to maintain its. existing management and corporate structure,' remain.
intact-as a' separate corporate entity, and " continue to be' the licensee responsible for: compliance with all-of the requirements and obligations imposed.under C-E's NRC licenses."
(CEletter,p.2). Further, it a ppears that the merger represents a straight-forward purchase of C-E's stock ay ABB and-does not. involve significant capital, restructuring.. Based on this'and the more detailed comitments contained in-pages 3-4 of C-E's letter, we conclude.that ADB's proposed aurchase of C-E will not adversely affect either 1 public health and safety or tie comon defense and security.
To increase 1
assurance that this conclusion will remain valid, we recomend that HMSS H
consider incorporating C-E's comitments either directly or by reference into C-E's NPC licenses.
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.hlenote,however,thatbothC-EandABBhavepotentialfinancialweaknesses 1
that could adversely. affect their ability to decomission if the financial 1
eassurance measures afforded by NRC's decomissioning rule were not in place.
' For 1988;. ' E had a cyrrent ratio (i.e. current assets divided by current liabilities)of0.83.
Normally, a ratio of less than 2.0 indicates potential liquidity. problems and a ratio of less than 1.0 even more serious short-tern
? problems. C-E also sustained a net loss of $245 million in 1988, although it 1
realized net income in 1986 and 1987. However, Moody's has rated C-E's l
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1 Financial data is from Moody's Industrial Manual, Vol. I, 1989.
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~' outstanding-long-term debt as Baa which is still investnient-grade. Moody's defines thic rating as indicating that " interest payment and principal security appear adequate for the present but certain protective elements may be
.ormaybecharacteristicallyunreliableoveranygreatlengthoftime." jacking As E
calculated from information submitted by C-E, ABB's current ratio is 1.01.
If transfers to and from corporate affiliates are excluded, the current ratio is 1.67.
In 1988 ABB sustained a net loss of $31 million and had negative cash flow. Moody's rating of ABB's long-term debt was not available.
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'As'part of'its commitments, C-E stated that "ABB is also prepared to provide the NRC with additional reasonable assurances that C-E will have the necessary b
-financial resources available.to decontaminate and decommission its nuclear facilities in accordance with all applicable legal requirements."
(C-E i
letter, p. 3).
In view of this connitment and C-E's and ABB's potential financial weaknesses, NMSS may wish to consider requiring C-E/ABB to base i
financial assurance'for deconnissioning their licensed facilities on site-specific studies by July 26, 1990, rather than the certification amounts contained in 10 CFR Parts-30 and 70.- Although we do not perceive significant L
risk'that C-E or ABB would not be able to meet eventual decommissioning costs, l
in view of their commitment, such'a~ step would pro"ide' additional assurance.
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Additionally,wenotethattheC-Ifstandardreactordesignwillbethesubject l'
of rulemaking to certify the design'for referencing on' reactor license applications. The ABB PIUS: advanced. design is under review by RES and L
potentially will be subject to NRC~ approval. We recommend that the Department of Justice be notified of these ongoing processes for information of potential I
use to its antitrust responsibilities.
If you have any questions on this, please contact Robert Wood on x21280 or l
William Lambe on x21277.
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Eileen H. McKenna, Acting Chief l
Policy Development and Technical Support Branch Program flanagement, Policy Development and Analysis Staff Office of fluclear Reactor Regulation cc: R.-Fonner, OGC A
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