TOKYO — Toshiba Corporation today announced that it has completed early payment of US$3.225 billion (approx. 361.4 billion yen*) (the “Payment”), reflecting the remaining outstanding amount of its US$3.68 billion (approx. 412.3 billion, maximum) parent company guarantee obligation in respect of the construction of Westinghouse AP1000 reactors at Units 3 and 4 of Plant Vogtle in Georgia, U.S.A. The payment was made to Georgia Power, a wholly-owned subsidiary of Southern Company, in its role as agent for the owners of the project: Georgia Power; Oglethorpe Power Corporation; Municipal Electrical Authority of Georgia; and Dalton Utilities (together, the “Vogtle Owners”).
The Payment is based on an agreement with the Vogtle Owners for the early payment of the full amount of the balance of the parent company guarantee as determined by prior settlement among the Vogtle Owners and Toshiba.
With the Payment, Toshiba eliminates future risk of foreign currency exchange fluctuations, while the redemption of the parent company guarantee obligation gives it the right to pursue claims against Westinghouse for the amount paid to Vogtle Owners (the “Claims”).
As announced on November 19, 2017, in “Toshiba to Explore Alternatives to Sell its Westinghouse Related Assets,” Toshiba plans to reduce its internal resources that it must allocate to Westinghouse’s rehabilitation proceedings by selling the Claims to a third party, along with assets that include debts Toshiba holds against Westinghouse and other Westinghouse-related companies that filed for Chapter 11 bankruptcy protection*1 (the “Assets”). Toshiba plans to sell the Claims and the Assets by the end of March 2018. If the sale of the Claims is completed by that date, Toshiba expects a tax impact that would increase Toshiba’s shareholders’ equity by the end of FY2017, ending March 31, 2018.
As announced in “Toshiba and Vogtle Owners Reach Agreement on Nuclear Power Plant Construction Project in Georgia,” released on June 10, 2017, Toshiba reached an agreement with Vogtle Owners that set the limit of Toshiba’s parent company guarantee obligation at US$3.68 billion (approx.. 412.3 billion yen), and that specified that payments were to be made in installments from October 2017 to January 2021. The first payment was made in October 2017, and prior to today’s settlement in full, Toshiba had paid US$455million (approx. 50.9 billion yen).
In “Toshiba to Explore Alternatives to Sell its Westinghouse Related Assets,” released on November 19, 2017, Toshiba announced that it would seek the funding necessary to make early payment of the parent company obligation, and thereby to obtain the Claims by prepaying its parent company guarantee obligations. As announced in “Notice regarding Closing of Financing Transaction,” on December 5, 2017, Toshiba successfully closed a transaction that allowed it to obtain the necessary funding, making possible today’s Payment.
Separately from the Vogtle project, Toshiba also previously reached agreement with South Carolina Electric & Gas Company (SCE&G), the principal and wholly-owned subsidiary of SCANA Corporation, and Santee Cooper (together, the “V.C. Summer Owners”), the owners of the project in South Carolina, U.S.A., for the construction of Westinghouse AP1000 reactors at Units 2 and 3 of the V.C. Summer Nuclear Station, that sets the limit of Toshiba’s guarantee obligation as the former parent company of Westinghouse at US$2.168 billion (242.9 billion yen). The Agreement, signed in the U.S. on July 27, 2017, also specifies that payments are to be made in installments, during the period from October 2017 to September 2022, and Toshiba has timely paid the accrued installments to date. Toshiba is in discussions with the owners of the V.C. Summer claims about the terms and conditions required for full payment of the guaranteed amount as determined in the prior settlement among Toshiba and the V.C. Summer Owners.
Toshiba will promptly announce any other matters that require disclosure.
*1 Companies that filed for a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code include Westinghouse Electric Company (“WEC”), certain of WEC's U.S. subsidiaries and affiliates, and Toshiba Nuclear Energy Holdings (UK) Limited, the holding company for Westinghouse Group operating companies outside the U.S.
* For convenience only, all U.S. dollar figures in this announcement are valued at 112.5 yen to the dollar.
In connection with the Financing, no securities will be or have been registered under the United States Securities Act of 1933, as amended, and may be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration, or qualification under the securities laws of any such jurisdiction. This announcement contains forward-looking statements concerning future plans, strategies and the performance of Toshiba Group. These forward-looking statements are not historical facts, rather they are based on management’s assumptions and beliefs in light of the economic, financial and other data currently available. Since Toshiba Group promotes business in various market environments in many countries and regions, its activities are subject to a number of risks and uncertainties that, without limitation, relate to economic conditions, worldwide mega-competition in the electronics business, customer demand, foreign currency exchange rates, tax rules, regulations and other factors. Toshiba therefore wishes to caution readers that actual results might differ materially from our expectations.
For over 140 years, Toshiba Corporation has contributed to a sustainable future by applying innovative technologies to value creation. Today, our business domains are centered on the essential infrastructure that supports modern life and society. Guided by the principles of The Basic Commitment of the Toshiba Group, “Committed to People, Committed to the Future”, Toshiba promotes global operations that contribute to realization of a world where generations to come can live better lives.
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