The Hitachi (6501) / MHI (7011) South Africa Project – Arbitration
Earlier this week, Hitachi (6501 JP) announced that it had received notice of a request for arbitration from Mitsubishi Heavy Industries (MHI, 7011 JP). At issue is the transfer price adjustment related to boiler construction projects in South Africa. The crux of the arbitration claim is MHI’s application for a ZAR 90,779 million (US$6.88 billion) payment from Hitachi.
The Claim:
The claim relates to Hitachi construction assets which were transferred to the Mitsubishi Hitachi Power Systems joint-venture. This business was created from the amalgamation of the fossil-fuel assets of Hitachi and MHI. As the bulk of these assets were MHI's, and as MHI intended to stay in the power business, while Hitachi remains uncertain as to its long-term involvement, the joint-venture was split 65% MHI, 35% Hitachi.
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