Toshiba makes first guarantee payments to US companies

03 October 2017

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Toshiba has made its first payments to the owners of the VC Summer and Vogtle nuclear construction projects under its guarantee obligations as the parent company of Westinghouse Electric Company (WEC). The Japanese company also confirmed it is to acquire KazAtomProm's 10% stake in Westinghouse on 1 January.

Construction work continues at Vogtle 3's containment vessel and annex building (Image: Georgia Power)



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 with the US courts in March, Toshiba agreed in June 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%) - with payments to be made in instalments from October 2017 to January 2021. In July, it reached an agreement with the owners of the Summer project - South Carolina Electric & Gas (SCE&G) (55%) and Santee Cooper (45%) - to pay a maximum of $2.168 billion.

Southern Company subsidiary Georgia Power said yesterday it had received its $137 million share of Toshiba's first payment of $300 million under the Vogtle agreement. The company said the payment was a "positive indication of Toshiba's commitment" to meeting its obligation under the guarantee. SCE&G parent Scana Corporation also confirmed to World Nuclear News that it received payment yesterday.

Construction is continuing at Vogtle, near Waynesboro. Project management and control at the site transitioned to Southern Nuclear after a services agreement between Westinghouse and Vogtle's co-owners became effective on 27 July, and in August Georgia Power contracted with Bechtel to manage daily construction efforts under the direction of Southern Nuclear. Georgia Power in August filed a recommendation with the Georgia Public Service Commission to complete construction of the two AP1000 units as the most economic choice for customers.

The owners of the Summer project decided in August to abandon the construction of the two AP1000s near Jenkinsville in South Carolina. SCE&G and Santee Cooper recently sold to Citibank NA the settlement payments to be made by Toshiba under its guarantee obligations for the project, with the exception of the $150 million first instalment due for payment on 1 October. The sale price of $1.847 billion is worth 91.5% of the full amount of the settlements.

KazAtomProm to sell



Toshiba said today it has received notice from KazAtomProm that it is exercising a 'put option' concerning its 10% share in the holding companies for WEC and its group entities. As a minority shareholder, the Kazakh state-owned company is entitled to sell its holding to Toshiba.

The share acquisition is planned to take place on 1 January 2018, at a price of about JPY59.0 billion ($522 million).

Toshiba said the exercise of KazAtomProm's put option will have a negative impact on its consolidated profit and loss stemming from a JPY15.3 billion impairment for the investment and a total negative impact of JPY64.6 billion on shareholders' equity in its consolidated balance sheet. The company has already made provision for these impacts in its forecast for fiscal 2017, it said.

The acquisition will see Toshiba take ownership of all of WEC's shares, although WEC is no longer under the control of Toshiba following its voluntary bankruptcy filing and has been deconsolidated from the Japanese company's results.

Researched and written

by World Nuclear News

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