Shaw Group (SHAW) on Tuesday announced plans to sell its 20% stake in nuclear power plant operator Westinghouse Electric back to Toshiba in an effort to cut down on its nearly $1.7 billion in debt.

Under the terms of the deal, Shaw subsidiary Nuclear Energy Holdings will exercise put options it acquired in 2006 to sell its investment in Westinghouse. Since the acquisition, the debt has risen by about $600 million.

We firmly believe that exercising the put options is in the best interest of our shareholders and our future business opportunities, Shaw CEO J.M. Bernhard Jr. said in a statement. It will eliminate almost $1.7 billion of debt, further strengthening our balance sheet.

Shaw partnered with Toshiba and Japanese engineering company IHI Corp. in 2006 to buy Westinghouse from British Nuclear Fuels for $5.4 billion. Toshiba had bought 77% of the company, while Shaw purchased 20% and IHI the remaining amount.

The company must obtain consent from the bondholders for exercising the Japanese yen-denominated put options before October 2012. Once all necessary approvals are accepted, Shaw said the shares will transfer within 90 days.

If consent is not granted, the puts will be exercised automatically on Oct. 6, for cash settlement the following January.

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