Toshiba settles guarantee obligation to VC Summer

15 January 2018

Japan’s Toshiba on 12 January completed the early payment of $1.86bn – the remaining outstanding amount of its parent company guarantee obligation – to Scana Corporation subsidiary South Carolina Electric & Gas (SCE&G) and Santee Cooper, the owners of the VC Summer nuclear plant in the USA. The parent company guarantee obligation to the owners of  Vogtle 3&4 - Georgia Power (45.7%), Oglethorpe Power (30%), MEAG Power (22.7%) and Dalton City (1.6%) - were settled in December. Both projects involve AP1000 reactors supplied  by Westinghouse Electric Company (a Toshiba subsidiary), which filed for Chapter 11 bankruptcy protection with the US courts in March 2017. Four AP1000 units were under construction - two each at VC Summer in South Carolina and Vogtle in Georgia.

In the wake of Westinghouse's bankruptcy filing, Toshiba agreed in July to pay a maximum of $2.168bn to the owners of the Summer project. This was to be paid in instalments between October 2017 and September 2022. Toshiba had previously made payments totalling $247.5m. 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 $1.8bn sale covered all payments to be made after October including the claims of SCE&G and Santee Cooper in Westinghouse's bankruptcy, allowing Citigroup the opportunity to pursue such claims against Westinghouse.

Toshiba said on 12 January it had paid $1.8605bn to Citigroup constituting the adjusted outstanding amount of the parent company guarantee obligation. "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. "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 by the end of this March, together with assets that include debts Toshiba holds against Westinghouse and other Westinghouse-related companies that filed for bankruptcy .

Construction began on Summer 2&3 and Vogtle 3&4 in 2013. Vogtle's co-owners filed a recommendation with the Georgia Public Service Commission (PSC) to complete construction of the new units as the most economic choice for customers and the PSC unanimously approved the recommendation in December subject to certain penalties. Earlier in January, Canada’s Brookfield agreed to acquire 100% of Westinghouse from Toshiba for a total of about $4.6bn. The acquisition is expected to close later in 2018.

Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.