MONCKS CORNER — Santee Cooper and SCANA Corp. are giving up $171 million to cash in their settlement with Toshiba Corp. early, moving to avoid the risk of financial trouble at the Japanese conglomerate and get paid faster for its role in the failed V.C. Summer nuclear project.
The power companies approved a deal Wednesday to sell their $2.2 billion legal settlement to New York investors for 92 cents on the dollar. In return for taking a smaller sum, the utilities will immediately receive a payment intended to cover part of the cost of the two unfinished nuclear reactors.
Instead of waiting for monthly installments over the next five years, New York-based Citibank, which is buying the utilities' rights to the Toshiba settlement, was expected to wire the cash Wednesday. A separate check from Toshiba is set to arrive this weekend.
"What we’re taking today is the bird in the hand," Santee Cooper chief executive Lonnie Carter said at a meeting of the state-owned utility in Moncks Corner. "This will give us some certainty."
SCANA, the owner of South Carolina Electric & Gas, confirmed later in the day that it had also accepted the deal. CEO Kevin Marsh called the deal "a crucial step to mitigate the risk and realize the value of these payments for the benefit of our customers."
Citibank submitted the highest of the 13 bids by offering to buy the settlement at an 8 percent discount, according to documents released by Santee Cooper. The sale does not include the first $150 million check from Toshiba that is due Sunday.
Santee Cooper board chairman Leighton Lord said the settlement proceeds would be used to offset electric rate increases in the short term and debt over the long term. The money also will pay off vendor liens associated with the nuclear project.
Santee Cooper and SCANA agreed in July to take the settlement with Toshiba, which owns the company responsible for building the two reactors north of Columbia.
The Fairfield County project was canceled in July after lead contractor Westinghouse Electric filed for bankruptcy, putting about 5,000 workers on the street. The utilities' analysis found spiraling costs and growing delays on the project, which cost $9 billion before it was abandoned.
The latest deal has significant consequences for customers of SCE&G and the state’s 20 electric cooperatives, which buy most of their power from Santee Cooper.
The settlement sale shrinks a pool of money both utilities say they'll use to reduce how much customers pay for the scuttled reactors. But it also gives them an exit from Toshiba’s roller-coaster financial situation, which has been teetering on the brink for months.
"The cooperatives appreciate how hard Santee Cooper and SCANA worked to reach that favorable result," said Mike Couick, chief executive of the Electric Cooperatives of South Carolina, a trade group representing small consumer-owned utilities around the state. "We look forward to working with Santee Cooper about how to apply (the proceeds)."
Toshiba is one of the world’s most iconic brands, a technology giant that makes everything from televisions to locomotives. But runaway costs and growing delays at the V.C. Summer plant and a similar project in Georgia put it in dire financial straits because the company had promised to cover budget overruns.
Toshiba was brought to its knees by mounting costs at the twin nuclear projects. Its balance sheet went into the red, and it faced the possibility of being removed from the Tokyo Stock Exchange, cutting off a major source of financing.
The financial troubles forced the company to put one of its most lucrative assets on the auction block — its flash memory business, one of the world’s largest producers of the chips embedded in smartphones and computers. The company landed an $18 billion deal last week to unload it to a consortium of buyers.