BRADENTON, Fla. - Heightened concern about a potential Westinghouse bankruptcy filing led to negative outlooks on municipal bonds issued for new nuclear units the company is building in Georgia and South Carolina.
Toshiba Corp., the Japanese parent company of Westinghouse Electric Co., delayed releasing its financial results a second time last week, edging it closer to delisting from the Tokyo Stock Exchange.
The financials, now scheduled to be released by April 11, are expected to detail billions in losses related to Westinghouse's nuclear construction contracts at Plant Vogtle in Georgia and VC Summer in South Carolina, both of which have been partly financed with public power agency bonds.
Toshiba has hired experts to explore placing Westinghouse into bankruptcy. A sale is also being considered.
Those actions, analysts said, could increase costs for the Georgia and South Carolina nuclear units under construction.
A bankruptcy could limit the ability of municipal power agencies to recover costs and damages, they said.
Moody's Investors Service this week placed negative outlooks on bonds issued for the new nuclear projects by the Municipal Electric Authority of Georgia, the South Carolina Public Service Authority's Santee Cooper, and Oglethorpe Power Corp, a cooperative in Georgia.
"In our opinion, these developments raise questions regarding the companies' ability and willingness to complete the projects, which would ultimately shift some of the risks of nuclear construction, and the potential for future cost increases," said Moody's analyst Dan Aschenbach.
Moody's also placed negative outlooks on the investor-owned utilities that are building the new units - Georgia Power Co., SCANA Corp., and related subsidiaries.
In February, Fitch Ratings placed its A-plus rating on Santee Cooper's bonds on rating watch negative due to the heightened risk posed by the continued weakening credit profile of Toshiba.
In the event of bankruptcy, the engineering, procurement and construction contract could be terminated and allow the co-owners to draw on letters of credit posted by the developer, Fitch analyst Dennis Pidherny said Tuesday. "However, the co-owners' abilities to recover additional costs and damages from the project guarantor could be limited in bankruptcy, undermining the benefits of the fixed-price agreement," he said.
"The public power issuers we rate have begun to make their plans for completing the plants with substitute contractors…should Toshiba enter bankruptcy," Pidherny said.
Moody's affirmed its A2 ratings on MEAG's outstanding $2.85 billion of M, J, and P nuclear project bonds at the same time it changed the outlook to negative on Tuesday.
Moody's also affirmed its A1 rating on Santee Cooper's $7.1 billion of outstanding revenue bonds, a portion of which was issued to finance its share of two new nuclear units at VC Summer.
"The situation with Toshiba and Westinghouse is complicated and fluid," Santee Cooper spokeswoman Mollie Gore said, when asked to comment on the situation. "Given that, it wouldn't be appropriate for me to speculate while they are working through the details.
"What I can say is that there are around 5,000 contract workers onsite at V.C. Summer working hard and continuing to make progress on these new nuclear units," she said.
MEAG did not respond to a request for comment.