COLUMBIA — Stock market investors who lost fortunes in the failure of South Carolina's multibillion-dollar nuclear reactor construction deal will soon begin to see their portions of a $192 million settlement under a recently approved distribution.
Last week, a federal judge signed off on a plan to disperse the funds among former shareholders in SCANA Corp., the former Cayce-based parent company of South Carolina Electric & Gas.
The settlement itself was the largest securities class action recovery obtained in South Carolina when a judge approved it last year, according to attorneys for the investors.
The utility became embroiled in controversy after announcing in July 2017 that it was shuttering a nuclear reactor construction project at the V.C. Summer power plant in Jenkinsville, about 30 miles north of Columbia, following the bankruptcy of lead contractor Westinghouse.
Up to that point, SCANA and state-owned utility Santee Cooper, a 45 percent owner in the scuttled project, had spent nearly $10 billion on it. The failure cost ratepayers and investors billions and left nearly 6,000 workers jobless.
The abandonment spawned multiple lawsuits, some by ratepayers alleging company executives knew the project was doomed and misled consumers as well as regulators as they petitioned for a series of rate increases to pay the mounting bills.
State and federal authorities launched investigations, which have led to guilty pleas from two top-level SCANA executives. They include former CEO Kevin Marsh, who will spend at least two years in prison and repay at least $5 million under a plea deal disclosed in February.
More than 737,000 SCE&G customers had already paid more than $2 billion in advance toward the project, which never generated any power. Customers did ultimately see retroactive credits applied to bills after lawmakers passed a temporary rate cut that knocked about $25 a month off the average residential customer's bill.
SCANA shareholders accused the company of assuring them the project was above board, even as costs and delays spiraled out of control. This, investors alleged, caused SCANA stock to be traded at artificially inflated prices, numbers that plummeted once the project was mothballed. In July 2016, SCANA stock was trading at $76.12 a share but dropped more than 50 percent after news of the project's failure, and the investigations surrounding it, became public, according to the investors' attorneys.
The settlement includes $160 million in cash, with the remaining $32.5 million covered by cash or stock in Dominion Energy. The Richmond, Va.-based company took over SCANA in early 2019, paying more than $6.8 billion to buy out the company's stock and assuming its consolidated net debts of $6.6 billion.
Claimants will be required to cash their checks within 120 days or forfeit the award, according to the order.
"We are pleased that the court has approved the settlement distribution plan, and look forward to the distribution of the settlement funds to eligible class members according to the plan," said Marlon Kimpson, a state senator and attorney representing the investors.
When she signed off on it last summer, U.S. District Judge Margaret Seymour of Columbia called the settlement fair and reasonable, considering the uncertainty SCANA's former shareholders would face if they took the dispute to trial. The payment is equal to 13 percent of the damages that they would have demanded had the case gone before a jury.
The law firms that represented the investors will be paid 14 percent of the settlement, or roughly $26.95 million. They included Bernstein, Litowitz Berger and Grossman, Mount Pleasant-based Motley Rice, and Labaton Sucharow.