Item 1.01.
Entry Into a Material Definitive Agreement.
The information related to the LGA Amendment and the Settlement Agreement Amendment (each as defined herein) is incorporated by reference into this Item 1.01.
Item 8.01.
Other Events.
See MANAGEMENT’S DISCUSSION AND ANALYSIS - FUTURE EARNINGS POTENTIAL - “Retail Regulatory Matters - Nuclear Construction” of Georgia Power Company (“Georgia Power”) in Item 7 and Note 3 to the financial statements of Georgia Power under “Retail Regulatory Matters - Nuclear Construction” in Item 8 of Georgia Power’s Annual Report on Form 10-K for the year ended December 31, 2016. See also MANAGEMENT’S DISCUSSION AND ANALYSIS - FUTURE EARNINGS POTENTIAL - “Retail Regulatory Matters - Nuclear Construction” of Georgia Power and Note (B) to the Condensed Financial Statements under “Retail Regulatory Matters - Georgia Power - Nuclear Construction” in Georgia Power’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 for additional information regarding the two new nuclear generating units under construction at Plant Vogtle (“Plant Vogtle Units 3 and 4”), including (1) the agreement among Georgia Power, acting for itself and as agent for Oglethorpe Power Corporation, the Municipal Electric Authority of Georgia, and the City of Dalton, Georgia, acting by and through its Board of Water, Light, and Sinking Fund Commissioners, doing business as Dalton Utilities (collectively, the “Vogtle Owners”), and a consortium consisting of Westinghouse Electric Company LLC and WECTEC Global Project Services Inc. (together, “Westinghouse”), under which Westinghouse agreed to design, engineer, procure, construct, and test two AP1000 nuclear generating units and related facilities at Plant Vogtle (the “Vogtle 3 and 4 Agreement”); (2) the filing, by Westinghouse, for bankruptcy protection under Chapter 11 of the U.S.
Bankruptcy Code and the rejection by Westinghouse of the Vogtle 3 and 4 Agreement; (3) the guarantee by Toshiba Corporation (“Toshiba”) of certain obligations of Westinghouse under the Vogtle 3 and 4 Agreement (the “Toshiba Guarantee”) and the settlement agreement among Georgia Power, the other Vogtle Owners, and Toshiba regarding the Toshiba Guarantee (the “Guarantee Settlement Agreement”); and (4) the $920 million of letters of credit from financial institutions delivered to the Vogtle Owners by Westinghouse (the “Letters of Credit”) to secure a portion of Westinghouse’s obligations under the Vogtle 3 and 4 Agreement.
Pursuant to the Guarantee Settlement Agreement, Toshiba acknowledged the amount of its obligation under the Toshiba Guarantee was $3.68 billion (the “Guarantee Obligations”), of which Georgia Power’s proportionate share was approximately $1.7 billion. The Guarantee Settlement Agreement provided for a schedule of payments for the Guarantee Obligations, beginning in October 2017 and continuing through January 2021. To date, Toshiba has made $455 million in scheduled payments of the Guarantee Obligations, of which Georgia Power’s proportionate share was approximately $208 million. Toshiba’s remaining scheduled payment obligations under the Guarantee Settlement Agreement are $3.225 billion, of which Georgia Power’s proportionate share is approximately $1.47 billion.
On December 8, 2017, Georgia Power, the other Vogtle Owners,
MEAG Power SPVJ, LLC (“MEAG Power SPVJ”), MEAG Power SPVM, LLC (“MEAG Power SPVM”), MEAG Power SPVP, LLC (together with MEAG Power SPVJ and MEAG Power SPVM, the “MEAG SPVs”), and Toshiba entered into Amendment No. 1 to the Guarantee Settlement Agreement (the “Settlement Agreement Amendment”). The Settlement Agreement Amendment provides that, subject to the satisfaction or waiver of certain conditions precedent, the remaining payment obligations of Toshiba under the Guarantee
Settlement Agreement (the “Remaining Scheduled Payments”) are due and payable in full on December 15, 2017. If Toshiba makes payment of the Remaining Scheduled Payments to Georgia Power, for the benefit of itself, the other Vogtle Owners, and the MEAG SPVs, on or before December 15, 2017 and Toshiba delivers an officer’s certificate required under the Settlement Agreement Amendment, on the date of such payment, Toshiba will be deemed to be the owner of certain pre-petition bankruptcy claims of Georgia Power, the other Vogtle Owners, and the MEAG SPVs against Westinghouse (the “Assigned Rights”). In addition, the Settlement Agreement Amendment provides that upon payment by Toshiba of the Remaining Scheduled Payments, Georgia Power and the other Vogtle Owners will surrender the Letters of Credit. If payment of the Remaining Scheduled Payments by Toshiba and delivery by Toshiba of the officer’s certificate have not occurred or been waived by the Vogtle Owners and the MEAG SPVs before December 16, 2017 (or such later date as the Vogtle Owners and the MEAG SPVs may designate), the Settlement Agreement Amendment will automatically terminate.
The foregoing summary of the Settlement Agreement Amendment is qualified in its entirety by reference to the full text of the Settlement Agreement Amendment, a copy of which is attached hereto as Exhibit 10.1.
In addition, on December 8, 2017, in connection with the Loan Guarantee Agreement dated February 20, 2014 (the “Loan Guarantee Agreement”), between Georgia Power and the United States Department of Energy (the “DOE”), the DOE consented to (i) Georgia Power’s entry into the Settlement Agreement Amendment, (ii) the release of the Assigned Rights from the lien of the security documents under the Loan Guarantee Agreement, and (iii) the surrender of the Letters of Credit (together, the “Consent Items”), and Georgia Power and the DOE entered into Amendment No. 4 (the “LGA
Amendment”) to the Loan Guarantee Agreement, to address the Consent Items. The LGA Amendment will become effective upon Georgia Power’s assignment of the Assigned Rights to Toshiba.
The foregoing summary of the LGA Amendment is qualified in its entirety by reference to the full text of the LGA Amendment, a copy of which is attached hereto as Exhibit 4.1.
Item 9.01.
Financial Statements and Exhibits.
(d) Exhibits
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4.1
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10.1
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Amendment No. 1 to Settlement Agreement, dated December 8, 2017, among Georgia Power Company, Oglethorpe Power Corporation, the Municipal Electric Authority of Georgia, MEAG Power SPVJ, LLC, MEAG Power SPVM, LLC, MEAG Power SPVP, LLC, the City of Dalton, Georgia, acting by and through its Board of Water, Light, and Sinking Fund Commissioners, doing business as Dalton Utilities, and Toshiba Corporation.
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