As expected, the Santee Cooper Board of Directors voted Feb. 13 during a special meeting to approve the sale of $1.1bn in revenue obligation bonds to help fund construction of V.C. Summer Units 2 and 3.
Santee Cooper, legally known as the South Carolina Public Service Authority, is the minority partner in the two new Westinghouse Electric AP 1000 nuclear reactors being constructed in Fairfield County, S.C.
SCANA (NYSE:SCG) utility subsidiary South Carolina Electric & Gas (SCE&G) is the majority partner in the ambitious nuclear project.
Nearly half of the amount was for refunding bonds to refinance a portion of Santee Cooper’s debt. The refunding produced net present value savings of $58.8m over the life of the bonds, Santee Cooper said in a statement.
The new money will be used for capital projects, primarily Santee Cooper’s share in the ongoing construction of additional units at V.C. Summer Nuclear Station.
Specifically, the board approved the sale of $599m in tax-exempt Series A, $64.9m in tax-exempt Series B, $270.2m in tax-exempt Series C and $169.7m in Taxable Series D bonds. The all-in true interest rate was 4.1%, Santee Cooper said.
“Although the market was somewhat volatile this week, we saw strong investor interest and were able to upsize the new-money portion of the deal by about $100 million,” said Jeffrey Armfield, Santee Cooper senior vice president and CFO.
The issue drew a rating of A+ from Fitch, AA- from Standard & Poor’s and A1 from Moody’s, which noted “Santee Cooper has an established sound financial record”. All three rating agencies issued Santee Cooper a stable outlook and reaffirmed long-term debt ratings.
Maturities for the 2015 ABCD issue range from 2016 through 2055. The term “tax exempt” means exempt from federal and South Carolina income taxes for South Carolina residents under current law.
Senior manager on the issue was Barclays, with Bank of America Merrill Lynch serving as co-senior manager. Co-managers were Goldman Sachs & Co., Morgan Stanley, J.P. Morgan, US Bancorp and Wells Fargo Securities.
A year ago, Santee Cooper reached a deal with SCANA to decrease its 45% ownership stake in the new nuclear units. SCANA’s electric utility agreed to acquire another 5% of Santee Cooper’s ownership in stages.
Under the terms of the transaction, SCE&G will ultimately own 60% of the new nuclear units and Santee Cooper, 40%.