South Carolina Electric & Gas Company (SCE&G), principal subsidiary of SCANA Corporation (SCANA) (NYSE: SCG), announced Wednesday that it, along with Santee Cooper, has sold to Citibank, N.A. (Citibank) all future guaranty settlement payments, due after the October 2017 payment of $150 million ($82.5 million for SCE&G's 55% share) from Toshiba Corporation (Toshiba).
These guaranty settlement payments from Toshiba were originally established as part of a definitive agreement entered into in July of 2017 and totaled $2.168 billion (approximately $1.192 billion for SCE&G's 55% share) payable over five years in full satisfaction of its guaranty of obligations of Westinghouse Electric Company, LLC (WEC) under the engineering, procurement, and construction contract for the new nuclear project at the V.C. Summer Nuclear Station in Jenkinsville, SC.
The monetization mitigates the credit risk associated with receiving the payments from Toshiba over a five year period and ensures that these funds are available to mitigate costs of the abandoned project for SCE&G's customers, SCE&G said in a statement.
"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," said SCANA Chairman and CEO, Kevin Marsh. "The guaranty settlement payments from Toshiba, as the parent company of Westinghouse, are payable due to the failure of Westinghouse to deliver on its fixed price commitment on our new nuclear project. This transaction allows us to ensure these payments are not subject to further credit risk. As we have consistently communicated, SCE&G intends to utilize the net value of these payments to mitigate the cost of the abandoned project to customers."
"Additionally, we hope that we will be able to engage in a discussion for a comprehensive settlement of the issues related to the project and how to further mitigate the impact on our customers. This transaction is a critical piece of that process," Marsh said.
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I wish I could get a deal like this. Figure in the expected inflation rate and do a future value vs. present value calculation of the funds you will see SCANA and Santee Cooper basically got 100% of the funds due them since they have access now to those funds as opposed to over a 5 year span.