SCANA Corp. Hit By Toshiba's $6 Billion Writedown Catastrophe

SCANA Corporation SCG was downgraded by Mizuho Tuesday as Toshiba Corp (USA) TOSYY — the backer for Scana’s nuclear construction projects in the U.S. — went into financial meltdown.

Analyst James von Riesemann downgraded the South Carolina-based holding company from Buy to Neutral and lowered his price target from $80 to $68.

Scana’s construction consortium with Toshiba subsidiary Westinghouse may not be economically viable any longer, leaving the construction of two new nuclear units to fall into Scana’s lap, von Riesemann said.

Toshiba’s Future Uncertain

Toshiba Corp. Chairman Shigenori Shiga is stepping down from his leadership role after the company lost $6.3 billion on its American nuclear business. Toshiba missed its scheduled financial reporting date on Tuesday.

The loss is related to Westinghouse’s December purchase of the nuclear construction business Stone & Webster, according to the Washington Post.

Benzinga reported at the time of the $229 million sale that Toshiba had warned investors of a potential writedown in the billions tied to the acquisition.

The multibillion-dollar hit to Toshiba’s bottom line has raised widespread speculation about the Japanese company’s viability going forward. CNBC reported that the price of insurance against a Toshiba credit default has risen by 30 basis points.

Mizuho: Wait For Clarity

Toshiba has not made any commitments regarding the nuclear plants it’s building for Scana and Southern Co SO, according to the Mizuho report.

“SCG and SO have about $150 million and $925 million in letters of credit backstopping the project, but these are not enough to see their respective projects through to completion.”

Additional details are expected when Scana holds its fourth-quarter earnings call on Thursday.

Mizuho has revised its 2016 EPS estimate for Scana to $4.22 and its 2017 EPS estimate to $4.24.