Two private equity firms have teamed up to bid for the business of bankrupt Westinghouse Electric Co., the main contractor on the failed V.C. Summer nuclear reactor.
Blackstone Group L.P. and Apollo Global Management are targeting the Hopkins-based company in a deal that could value Westinghouse at close to $4 billion, Reuters reported Wednesday. Reuters said Westinghouse is working with investment bank PJT Partners Inc. on the sale, which is still in its early stages.
A Westinghouse spokeswoman did not immediately return a call seeking comment.
Reuters cited unnamed sources as saying that Westinghouse may have other suitors. Buyout firm Cerberus Capital Management L.P. is in talks with BWX Technologies Inc., a U.S. provider of nuclear power plant components, about a joint bid, Reuters said.
The article quoted a Westinghouse spokeswoman as saying the company had begun the process to exit bankruptcy through a sale or an investment. She would not comment on potential bidders or the company’s valuation.
Westinghouse filed for Chapter 11 bankruptcy protection in April. The company had concluded, after years of soaring costs and multiple delays related to the V.C. Summer project, that finishing construction of the two 1,117-megawatt reactors would be “prohibitively expensive.”
After Westinghouse’s announcement, state-owned utility Santee Cooper, which owns 45% of the project, and SCANA Corp. subsidiary S.C. Electric and Gas, which owns the remaining 55%, abandoned the project. The companies had sunk around $9 billion into it since construction began in 2012.
The failed project has cost ratepayers of both utilities more than $2 billion.
Public Service Commission defers action on request to suspend rate collection
In a special meeting today, the S.C. Public Service Commission did not rule on an Office of Regulatory Staff request to block SCE&G from charging customers more money to pay for the failed project, but did agree to scheule a hearing on the request's merits for a later date.
SCE&G filed a motion to dismiss the request, saying it was "illegal and unconstitutional" and could reduce the company's earnings by $3.8 billion, The State newspaper reported.
Toshiba, a Japanese conglomerate that owns Westinghouse, had struggled financially in the wake of the V.C. Summer project’s troubles and ultimate failure. In July, Westinghouse negotiated a $2.2 billion guarantee for the project with its parent company, capping Toshiba’s project liability. On Wednesday, SCANA and Santee Cooper sold the monetary rights to that settlement claim to Citibank in a deal that will allow the utilities to receive payment immediately at a slight discount. Santee Cooper will receive $831.2 million and SCANA $1.92 billion.
The initial settlement had called for a five-year payment period.
Another suit filed
Mount Pleasant-based law firm Motley Rice, renowned for its asbestos and tobacco litigation, filed suit against SCANA in federal court on Wednesday, alleging securities fraud violations. The lawsuit charges SCANA with artificially driving up stock prices “by issuing false and misleading statements to investors and omitting material information concerning the progress, cost and completion schedule” of the V.C. Summer project.
The lawsuit names SCANA CEO and Chairman Kevin Marsh, whom Columbia attorney Brian Gambrell also mentioned in a suit filed Monday. That suit accuses SCANA of violating a federal racketeering statute by charging customers for the uncompleted reactors.
The Motley Rice suit also mentions the Bechtel report, a document prepared by the Bechtel Corp. at the request of SCANA to assess Westinghouse’s performance as a contractor. The report, completed in February 2016, pointed out a lack of management, vision, goals and accountability between SCANA and Westinghouse.
The report was not made public until lawmakers threatened to subpoena it last month. It was among the targets of a federal subpoeana issued to Santee Cooper and SCANA on Thursday.
Rather than disclose the contents of the report when it was first received, Wednesday’s lawsuit alleges that “Defendants doubled down on their strategy of deception and misdirection by issuing SCANA-produced promotional videos, press releases and other public statements that created a fundamentally false and misleading impression to investors that the project was running smoothly within a reasonable budget and on schedule.”
Defendants also include SCANA CFO Jimmy Addison and Executive Vice President Stephen Byrne.
Santee Cooper executives to appear before House
Santee Cooper executives will take their turn before a House committee probing the failed project on Tuesday.
The House Utility Ratepayer Protection Committee has held three previous meetings, hearing from the Office of Regulatory Staff and the Public Service Commission, SCANA and SCE&G executives, and ratepayers. In this week’s hearing, ratepayers called for greater accountability and a repeal of the controversial Base Load Review Act.
S.C. Attorney General Alan Wilson joined in the criticism of the 2007 state law, which allowed utilities to charge customers for power plants before they began producing electricity, calling it “constitutionally suspect.”