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A Bird in the Hand


September 27, 2017   By Susan Mungo in

Santee Cooper’s Board of Directors approved an agreement on Sept. 27 to sell the monetary rights to our portion of the $2.168 billion Toshiba Guaranty Settlement Claim to Citibank, N.A. This is a good move and will benefit customers and other stakeholders.

The agreement completely shifts the risk away from Santee Cooper and customers of collecting those dollars from Toshiba over the next five years, which was part of the terms of the Toshiba Guaranty Settlement Claim. It also means Santee Cooper will receive $831.2 million right away, for its 45 percent share.

The agreement does not include the first-scheduled payment from Toshiba of $150 million, of which Santee Cooper’s share is $67.5 million. That payment is expected on Oct. 1. Combining the agreement with Citibank and the first-scheduled payment from Toshiba, Santee Cooper will receive $898.7 million. 

You may wonder how this provides stability or good news other than just money in hand. For one, the risk or question of another entity, in this case a financially weakened Toshiba, making payments during a five-year span is eliminated.

Second, getting the money up front allows Santee Cooper to use those immediate funds to offset costs and rate increases in the short term. It also means we can offset debt over the long term and pay Santee Cooper’s portion of mechanics’ liens. This move also is expected to be viewed positively by the financial community, which can be crucial to Santee Cooper’s bond ratings.

Santee Cooper evaluated a number of competitive offers and chose Citibank because that financial institution offered the highest cash bid for the guaranty and at the same time agreed to Santee Cooper’s terms and conditions of sale.  While this agreement will allow Citibank the opportunity to pursue claims against Westinghouse, Santee Cooper will retain its 45 percent ownership in the V. C. Summer project.

The proceeds from this agreement coupled with the first Toshiba payment and other cost-saving measures being implemented should allow Santee Cooper to move forward with a strong financial plan for 2018 and beyond that is most beneficial to customers.