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Santee Cooper, SCANA reach deal on monetary rights to Toshiba settlement

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Santee Cooper and SCANA have reached an agreement to sell the monetary rights to a $2.17 billion settlement claim owed to the utilities by Toshiba to Citibank.

The agreement pays 91.5% of the settlement claim and gives state-owned Santee Cooper $831.2 million immediately for its 45% share of the claim owed by the Japanese technology conglomerate. SCANA will receive nearly $1.02 billion for the 55% share due subsidiary S.C. Electric & Gas, the investor-owned utility said in a news release.

Toshiba owns Westinghouse, the main contractor of the failed V.C. Summer nuclear reactor construction project, and had agreed to cover budget overruns of the project, which was canceled in July after Westinghouse filed for Chapter 11 bankruptcy protection in April.

The project cost ratepayers more than $2 billion and left 5,600 people jobless after spiraling costs and delays led to its abandonment. The utilities paid $9 billion into the project, which was budgeted to cost around $11.3 billion when first approved in 2009 but saw projected costs soar to closer to $20 billion.

The initial settlement had called for Toshiba to make payments over a five-year period.

Santee Cooper said it received 13 bids for the monetary rights to the claim from five broker-dealers and eight investment management firms. Citibank submitted the highest bid.

“This shifts the risk away from Santee Cooper and our customers, allowing for a one-time payment to take place now,” Leighton Lord, chairman of the board of directors, said in a release on the company website. “We will use this money to benefit customers by offsetting rate increases in the short term, offsetting debt over the long term and paying our portion of mechanics liens.”

Toshiba has struggled as costs and delays at V.C. Summer mounted. It faced the possbility of being removed from the Tokyo Stock Exchange and has been forced to try to sell its lucrative flash memory business.

Toshiba announced today it reached a binding agreement to sell its memory-chip unit to a group led by Bain Capital, a U.S. private equity firm, for $17.7 billion. 

"With Toshiba still facing challenges, we believe this was a crucial step to mitigate the risk and realize the value of these payments for the benefit of our customers," SCANA CEO and chairman Kevin Marsh said. "This transaction allows us to ensure these payments are not subject to further credit risk."

Suit alleges racketeering violations

A lawsuit filed Monday in Columbia accuses SCANA of violating a federal racketeering statute by charging customers for the costs of building the two nuclear reactors that won’t be completed.

The suit claimed SCANA provided optimistic overviews of the project that it knew to be false while doling out bonuses to its executives. The suit only names SCANA as a defendant but criticizes Santee Cooper.

The suit, filed by Columbia attorney Brian Gambrell, said the SCANA executives and employees had received more than $3.4 million in bonuses related to the reactor project since 2007, including a $3.3 million bonus awarded to Marsh in 2016.

If successful, the suit could result in rebates to customers.

On Wednesday, Mount Pleasant plantiff law firm Motley Rice filed suit in federal court, alleging securities fraud violations against SCANA. The lawsuit says SCANA artificially drove up stock prices "by issuing false and misleading statements to investors, and omitting material information, concerning the progress, cost, and completion schedule of the multi-billion dollar nuclear construction project at V.C. Summer Nuclear Station."

Also Wednesday, Reuters reported that private equity firms Blackstone Group LP and Apollo Global Management LLC joined forces to bid for the business of Westinghouse. Reuters said Westinghouse is working with an investment bank on the sale, which could value Westinghouse at close to $4 billion.

A Westinghouse spokeswoman did not immediately return a call seeking comment.

SCANA intends to fight rate relief request

The state’s top utility watchdog, the Office of Regulatory Staff, capped Tuesday’s House Utility Ratepayer Protection Committee meeting by filing a rate relief request for SCE&G customers with the Public Service Commission. The request asked the commission to immediately suspend all rate increases related to the V.C. Summer project and called for refund credits for ratepayers if the Base Load Review Act, a controversial 2007 state law that paved the way for utilities to charge customers for the reactors before they were finished, is overturned.

The request cited S.C. Attorney General Alan Wilson's opinion, released Tuesday, that the act is “constitutionally suspect.”

In response, SCANA filed an 8-K form with the Securities and Exchange Commission on Wednesday, saying, “SCE&G intends to vigorously contest the request.” The filing continued: “No assurance can be given as to the timing or outcome of this matter” — the same response SCANA gave to receiving federal subpoenas related to the project on Thursday.

In addition to annual and quarterly reports, public companies must file 8-Ks to announce major events that concern shareholders. 

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