Santee Cooper Set to Price $575M for Atomic Units

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BRADENTON, Fla. — The South Carolina Public Service Authority Tuesday prices $575 million of tax-exempt and taxable revenue bonds, much of which will further work on two new nuclear units cleared for licensing by the U.S. Nuclear Regulatory Commission last week.

Proceeds will be used to refund $100 million of commercial paper with the balance being new money, primarily for the nuclear project.

The authority, also known as Santee Cooper, said the preliminary structure of the offering includes $312.8 million of tax-exempt bonds with serial maturities from 2013 to 2032, and term bonds maturing in 2039 and 2043.

Another $262.2 million of taxable bonds will have serial maturities from 2022 through 2030. The serial structure is designed to factor in an important retail customer element in South Carolina, according to Santee Cooper spokeswoman Mollie Gore.

A tax-exempt retail order period was held Monday, and received strong demand, Gore said. Pricing details were not immediately available. Institutional sales are set for Tuesday, with Barclays Capital Inc. as the book-runner.

The bonds are rated AA-minus by Fitch Ratings and Standard & Poor’s, and Aa3 by Moody’s Investors Service.

Analysts said an important factor in Santee Cooper’s rating going forward depends on how successful the utility is in reducing its ownership exposure in the development of two new nuclear units at the Virgil C. Summer Nuclear Station from 45% to 20%.

“Santee Cooper has entered into a letter of intent with Duke Energy Carolinas and we are continuing to negotiate a possible sale,” Gore said, referring to the reduction of ownership. Discussions are underway with other potential parties, she added.

Santee Cooper is South Carolina’s state-owned electric and water utility and the state’s largest power producer, serving two million customers. The public utility is a partner with the South Carolina Electric & Gas Co. in adding two more reactors to an existing unit at the V.C. Summer plant in Jenkensville, S.C., which is about 26 miles from Columbia.

On Friday, the NRC said it had concluded hearings and reviews necessary to issue two combined construction and operating licenses at the Summer site where two Westinghouse AP1000 reactors will be built.

In February, the NRC approved two new nuclear units at Plant Vogtle in Georgia, which is jointly owned by Georgia Power, Oglethorpe Power Corp., the Municipal Electric Authority of Georgia and Dalton Utilities.

Santee Cooper’s financial advisor is Public Financial Management Inc.

Along with Barclays, other underwriters on this week’s sale are Bank of America Merrill Lynch, Citi, Goldman, Sachs & Co., JPMorgan and Morgan Stanley. Haynsworth Sinkler Boyd PA is bond counsel and McNair Law Firm PA is underwriters’ counsel.

On Monday, Santee Cooper kicked off its ninth sale of mini bonds, offering South Carolina residents the opportunity to purchase tax-exempt bonds through April.

Some $53 million of M1 current-interest bonds are available in denominations of $500. They mature in 2017, 2022, 2027 and 2032. Another $32 million of capital appreciation bonds are available at $200 each. The CABs mature in 2021, 2026 and 2031. The maximum combined purchase is $50,000 per person.

The mini-bond program helps Santee Cooper provide South Carolina with “reliable, low-cost, and environmentally protective electricity, ” said president Lonnie Carter.

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