The growing financial woes of the Washington Public Power Supply System, teetering on the edge of multibillion-dollar default, have reached into more pockets with the layoffs of 1,250 nuclear power plant construction workers.
WPPSS' executive board decided Friday to halt construction on nuclear plant No. 3 for three to five years because it could not raise more money to complete it. Pink slips went out Tuesday, when the supply system missed a $15.6 million monthly interest payment due to Chemical Bank, trustee for $2.25 billion in WPPSS construction bonds.
Although Chemical had said it would formally declare WPPSS in default if the payment was missed, Superior Court Judge Joseph Coleman in King County, Washington, signed an order Friday prohibiting the bank and bondholders from declaring the system in default until a trial on the matter is held. Chemical said it is considering an appeal.
Among factors being weighed by Chemical, a bank spokesman said, is that the court "found it important that approximately $30 million already has been deposited by utilities into escrow accounts, subject to the control of the court.
"The court also found there is no immediate harm to bondholders as a result of the injunction, stating that July interest payments can be made from funds currently available," Chemical said.
If default is declared, Chemical Bank could demand payment from WPPSS on the bond debt--which could total more than $7 billion over the next 35 years.
In New York, Moody's Investors Service Inc. suspended its rating on bonds issued to finance three of the five nuclear projects originally planned by WPPSS.
Moody's said yesterday it had undertaken a new review of the bonds' creditworthiness.