ML20164A230
| ML20164A230 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley, Davis Besse, Perry, 07201043, 07200069 |
| Issue date: | 07/01/2020 |
| From: | Nancy Salgado Plant Licensing Branch III |
| To: | Hamilton D Energy Harbor Nuclear Corp |
| Vaidya B | |
| References | |
| EPID L-2020-LRO-0024 | |
| Download: ML20164A230 (6) | |
Text
July 1, 2020 Mr. David B. Hamilton Senior Vice President and Chief Nuclear Officer Energy Harbor Nuclear Corp.
Mail Stop A-WAC-B2 341 White Pond Drive Akron, OH 44320-1119
SUBJECT:
ENERGY HARBOR NUCLEAR CORP. - BEAVER VALLEY POWER STATION, UNIT NOS. 1 AND 2; DAVIS-BESSE NUCLEAR POWER STATION, UNIT NO. 1; AND PERRY NUCLEAR POWER PLANT, UNIT NO. 1 - REQUEST FOR THRESHOLD DETERMINATION UNDER 10 CFR 50.80 AND 10 CFR 72.50 FOR THE INTERIM STAGE OF THE PROPOSED STOCK BUY-BACK TRANSACTION (EPID L-2020-LRO-0024)
Dear Mr. Hamilton:
By letter dated May 4, 2020, Energy Harbor Nuclear Corp., acting on behalf of itself and Energy Harbor Nuclear Generation LLC (collectively, the licensees), requested that the U.S. Nuclear Regulatory Commission (NRC, the Commission) make a threshold determination that the Interim Stage of the proposed stock buy-back transaction involving the current owners of the licensees would not result in a change of control of the NRC licenses held by the licensees that would require NRC approval pursuant to Title 10 of the Code of Federal Regulations (10 CFR)
Section 50.80, Transfer of licenses, and 10 CFR 72.50, Transfer of license.
The NRC staff has completed its review and concludes that the Interim Stage of the proposed stock buy-back transaction will not constitute a direct or indirect transfer of control of the NRC licenses held by the licensees. Therefore, the licensees do not require the NRCs consent under 10 CFR 50.80 and 10 CFR 72.50 for the Interim Stage of the proposed stock buy-back transaction. The enclosed safety evaluation documents the NRC staffs review and findings.
D. Hamilton If you have any questions, please contact the Project Manager, Bhalchandra Vaidya, at (301) 415-3308 or Bhalchandra.Vaidya@nrc.gov.
Sincerely, Digitally signed by Scott Scott P. Wall P.Date:
Wall 2020.07.01 11:25:07 -04'00' Nancy L. Salgado, Chief Plant Licensing Branch III Division of Operating Reactor Licensing Office of Nuclear Reactor Regulation Docket Nos. 50-334, 50-412, 50-346, 50-440, 72-1043, 72-14, and 72-69
Enclosure:
Safety Evaluation cc:
DAVIS-BESSE PERRY BEAVER VALLEY Terry J. Brown Frank R. Payne Rod L. Penfield Site Vice President Site Vice President Site Vice President Energy Harbor Nuclear Corp. Energy Harbor Nuclear Corp. Energy Harbor Nuclear Corp.
Davis-Besse Nuclear Power Station Perry Nuclear Power Plant Beaver Valley Power Station Mail Stop P-DB-3080 Mail Stop P-PY-A290 Mail Stop P-BV-SSB 5501 N. State Route 2 PO Box 97, P.O. Box 4, Route 168 Oak Harbor, OH 43449-9760 Perry, OH 44081-0097 Shippingport, PA 15077-0004 Listserv
SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION THRESHOLD DETERMINATION FOR THE INTERIM STAGE OF THE PROPOSED STOCK BUY-BACK TRANSACTION FOR ENERGY HARBOR NUCLEAR CORP.
BEAVER VALLEY POWER STATION, UNIT NOS. 1 AND 2 AND INDEPENDENT SPENT FUEL STORAGE INSTALLATION FACILITY (ISFSI)
DOCKET NOS. 50-334, 50-412, AND 72-1043 DAVIS-BESSE NUCLEAR POWER STATION, UNIT NO. 1 AND ISFSI DOCKET NOS. 50-346 AND 72-14 PERRY NUCLEAR POWER PLANT, UNIT NO. 1 AND ISFSI DOCKET NOS. 50-440 AND 72-69
1.0 INTRODUCTION
By letter dated May 4, 2020 (Agencywide Documents Access and Management System (ADAMS) Accession No. ML20125A345), Energy Harbor Nuclear Corp., acting on behalf of itself and Energy Harbor Nuclear Generation LLC (collectively, the licensees), requested that the U.S. Nuclear Regulatory Commission (NRC, the Commission) make a threshold determination that the Interim Stage of the proposed stock buy-back transaction involving the current owners would not result in a change of control of the NRC licenses held by the Licensees that would require NRC approval pursuant to Title 10 of the Code of Federal Regulations (10 CFR) Section 50.80, Transfer of licenses, and 10 CFR 72.50, Transfer of license.
2.0 BACKGROUND
The licensees emerged from bankruptcy on February 27, 2020, at which point the ultimate parent company of the licensees became Energy Harbor Corp. Energy Harbor Corp. is owned by the previous creditors of FirstEnergy Solutions Corp. (FES) and FES debtor-affiliates who converted their claims into equity in Energy Harbor Corp.
Enclosure
Nuveen Asset Management, LLC (Nuveen), through funds it manages, is the largest holder of voting shares of Energy Harbor Corp., holding approximately 39 percent of the issued and outstanding shares of common stock (stock) on a fully diluted basis. Avenue Capital Management II, LP (Avenue), through funds it manages, is the second largest holder of voting shares of Energy Harbor Corp., holding approximately 14 percent of the stock on a fully diluted basis.
The Board of Directors (Board) of Energy Harbor Corp. (currently eight members) is selected pursuant to a Stockholders Agreement in place among Energy Harbor Corp. and its stockholders. Nuveen and Avenue have certain director designation rights under this agreement. In particular, so long as Nuveen and Avenue hold a minimum threshold of outstanding Energy Harbor Corp. stock, Nuveen has the authority to designate two directors and Avenue one director. Of the two directors Nuveen can designate, one of those directors must be independent of any stockholder with director nomination rights, including Nuveen.
3.0 EVALUATION The NRC staff reviewed the licensees request for a threshold determination that the Interim Stage of the proposed stock buy-back transaction would not involve a direct or indirect transfer of control of the NRC licenses held by the licensees that would require NRC approval pursuant to 10 CFR 50.80 and 10 CFR 72.50. The regulation at 10 CFR 50.80(a) states, in part, that:
No license for a utilization facility ... or any right thereunder, shall be transferred, assigned, or in any manner disposed of, either voluntarily or involuntarily, directly or indirectly, through transfer of control of the license to any person, unless the Commission gives its consent in writing.
The regulation at 10 CFR 72.50(a) states, in part, that:
No license for an ISFSI shall be transferred, assigned, or in any manner disposed of, either voluntarily or involuntarily, directly or indirectly, through transfer of control of the license to any person, unless the Commission gives its consent in writing.
Per the request, the Energy Harbor Corp. Board has authorized Energy Harbor Corp.s management to repurchase up to $500 million of Energy Harbor Corp.s outstanding stock.
Energy Harbor Corp. expects to repurchase such stock from time to time in accordance with applicable laws and regulations. The actual timing, number, and value of stock repurchased will be determined by Energy Harbor Corp.s management and will depend on a number of factors, including market prices, general market and economic conditions, and compliance with applicable legal requirements.
Nuveen and Avenue currently hold approximately 39 percent and 14 percent of the stock of Energy Harbor Corp., respectively. If the proposed buy-back transaction proceeds as anticipated, the percentage of stock held by each of Nuveen and Avenue will increase because fewer shares of stock will be outstanding overall. While the licensees do not know at this time precisely how much these current ownership percentages will increase, in any event Nuveen will not hold more than 58 percent of the stock of Energy Harbor Corp. and Avenue will not hold more than 30 percent. The percentage of stock held by Nuveen and Avenue may also increase to the extent that the two stockholders purchase additional stock from other Energy Harbor Corp. stockholders from time to time.
Per the submitted Voting Agreement, if the percentage of Energy Harbor Corp. stock held by Nuveen increases above its current level (that is, approximately 39 percent), Nuveen will only hold a beneficial (that is, an economic non-controlling) interest in such additional ownership percentage until necessary regulatory approvals are received. More specifically, Nuveen will not have the ability to vote above its approximately 39 percent current level of stock ownership until necessary regulatory approvals are received. The Stockholders Agreement will also continue to govern the composition of the Energy Harbor Corp. Board.
In the Interim Stage of the proposed stock buy-back transaction, Nuveen will adhere to the Voting Agreement. Section 2.1 of the Voting Agreement prevents Nuveen from voting its stockholdings beyond its current holdings of approximately 39 percent of Energy Harbor Corp.
stock. The Energy Harbor Corp. Board will also continue to be constituted pursuant to the Stockholders Agreement already in place.
Although during the Interim Stage of the proposed stock buy-back transaction Nuveen could potentially increase its proportional beneficial ownership of the Energy Harbor Corp. stock up to 58 percent (also accounting for any Nuveen purchases of Energy Harbor Corp. stock), pursuant to the Voting Agreement and Stockholders Agreement, it will not obtain any increased voting power or ability to designate more Energy Harbor Corp. directors than it currently has.
Therefore, Nuveen cannot exert majority stockholder control over Energy Harbor Corp. even if it accrues beneficial ownership of a majority of outstanding shares.
The financial and technical qualifications of the licensees to own and operate the four above-referenced reactors and three independent spent fuel storage installations (the facilities) will not be affected by the proposed transaction. There will be no physical changes to the facilities, no changes in their day-to-day operations, and no material changes to equipment operating procedures in connection with the transaction. The facilities onsite organizations will remain unchanged by the transaction and the onsite organizational structure, including lines of authority and communication, will not be affected by the transaction. There will also be no changes to the Energy Harbor Corp. corporate structure as a result of the transaction.
4.0 CONCLUSION
The NRC staff concludes that the Interim Stage of the proposed stock buy-back transaction will not constitute a direct or indirect transfer of control of the NRC licenses held by the Licensees.
Therefore, the Licensees do not require the NRCs consent under 10 CFR 50.80 and 10 CFR 72.50 for the Interim Stage of the proposed stock buy-back transaction.
Contributor: Trent L. Wertz, NMSS/REFS/FAB Date: July 1, 2020
ML20164A230 (*) By Email OFFICE NRR/DORL/LPL3/PM* NRR/DORL/LPL3/LA* NMSS/REFS/FAB/BC*
NAME BVaidya SRohrer FMiller DATE 6/15/2020 6/15/2020 6/15/2020 OFFICE OGC* NRR/DORL/LPL3/BC* NRR/DORL/LPL3/PM*
NAME JWachutka NSalgado (RKuntz for)
DATE 6/17/2020 6/30/2020