Toshiba settles VC Summer guarantee obligation
Toshiba has completed the early payment of $1.86 billion, reflecting the remaining outstanding amount of its parent company guarantee obligation to the owners of the VC Summer AP1000 project in the USA. It settled its parent company guarantee obligation to the owners of the Vogtle project last month.
Japan's Toshiba is the parent company of former Summer and Vogtle primary contractor Westinghouse. Parental guarantee obligations were agreed by Toshiba and the owners of the two US AP1000 construction projects in 2008, when orders for the units were first placed with Westinghouse.
Following Westinghouse's filing for chapter 11 bankruptcy protection with the US courts in March, Toshiba agreed in July to pay a maximum of $2.168 billion to the owners of the Summer project, Scana Corporation subsidiary South Carolina Electric & Gas (SCE&G) and Santee Cooper. This was to be paid in instalments between October 2017 and September 2022. Toshiba previously made payments totalling $247.5 million.
In late September, SCE&G and Santee Cooper - which hold 55% and 45% shares in the Summer project - sold to Citigroup the settlement payments to be made by Toshiba under its guarantee obligations. The sale, for $1.8 billion, covered all payments to be made after October and includes the claims of SCE&G and Santee Cooper in Westinghouse's bankruptcy, allowing Citigroup the opportunity to pursue such claims against Westinghouse.
Toshiba announced today that it has made a payment of $1.8605 billion to Citigroup constituting the outstanding amount of the parent company guarantee obligation. This, it said, had been adjusted to deduct $60 million related to the mechanic's lien, a guarantee of payments to builders.
"With the payment, Toshiba obtains the right to pursue claims against Westinghouse for the amount paid for the parent guarantee obligation for the VC Summer project, while eliminating future risk of foreign currency exchange fluctuations," the company said.
In June Toshiba agreed to pay a maximum of $3.68 billion to the owners of Vogtle - Georgia Power (45.7%), Oglethorpe Power (30%), MEAG Power (22.7%) and Dalton City (1.6%) - under the parental guarantee. Payments to be made in instalments from October 2017 to January 2021. Toshiba settled the full guaranteed amount under the agreement in mid-December.
The company noted, "With today's payment, Toshiba has completed early payments in full to the maximum limit of its parent company guarantee obligations for Westinghouse AP1000 reactor construction projects in the US."
Toshiba plans to "reduce its internal resources that it must allocate to Westinghouse's rehabilitation proceedings" by selling the claims to a third party. It hopes to sell the claims - together with assets that include debts Toshiba holds against Westinghouse and other Westinghouse-related companies that filed for chapter 11 bankruptcy protection - by the end of this March.
A total of four AP1000 units - two each at VC Summer in South Carolina and Vogtle in Georgia - were under construction in the USA prior to Westinghouse's bankruptcy filing. Construction began on Summer unit 2 and Vogtle unit 3 in March 2013, with work beginning on Summer 3 and Vogtle 4 in November of that year. Vogtle's co-owners, led by Georgia Power, in August filed a recommendation with the Georgia Public Service Commission (PSC) to complete construction of the new units as the most economic choice for customers. On 21 December, the PSC unanimously approved the recommendation, while the project's owners agreed to new penalties for delays and cost increases stipulated by the PSC.
Earlier this month, Brookfield Business Partners, together with institutional partners - collectively known as Brookfield - agreed to acquire 100% of Westinghouse from Toshiba for a total of about $4.6 billion. The acquisition is expected to close in the third quarter of this year.
Researched and written
by World Nuclear News
