Columbia, SC (AP, WLTX) - South Carolina Electric and Gas (SCE&G) and Santee Cooper, the state-owned utility, are selling their portions of a $2.2 billion, five-year settlement over a failure nuclear power project to essentially collect 92 percent immediately.
SCE&G announced today that it, along with Santee Cooper, has sold to Citibank, all future guaranty settlement payments, monetizing the settlement with the parent company of Westinghouse.
Westinghouse is the bankrupt lead contractor of the now-defunct project.
SCE&G and Santee Cooper signed the settlement with Toshiba days before the partners bailed on the partly built reactors at V.C. Summer Nuclear Station.
"Nobody knows where Toshiba is going to be five years from now," says Dr. Robert Hartwig, finance professor at the Darla Moore School of Business. "They've already declared bankruptcy. So, the idea here is to limit the possibility of Toshiba to pay anything a few years down the road, by taking a somewhat smaller settlement today."
Santee Cooper CEO Lonnie Carter calls Citibank's high bid of 91.5 percent "a bird in the hand" considering the Japanese company's "terribly weak" below investment-grade credit.
According to the Santee Cooper release, the company will receive $831.2 million today for it's 45 percent share.
“This shifts the risk away from Santee Cooper and our customers, allowing for a one-time payment to take place now instead of a number of payments over five years,” said Leighton Lord, Chairman of the Santee Cooper Board of Directors. “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.”
According to a SCANA spokeswoman, SCE&G is expected to receive $1.016 billion for their 55 percent share.
"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," says Kevin Marsh, SCANA Chairman and CEO.
Citibank's payout does not include Toshiba's first payment of $150 million to the utilities, due this weekend.