Pg 1 of 8 Craig A. Wolfe, Esq. Jason R. Alderson, Esq. SHEPPARD MULLIN RICHTER & HAMPTON, LLP 30 Rockefeller Plaza New York, NY 10112 Tel: (212) 653-8700 Fax: (212) 653-8701 Counsel to Doosan Heavy Industries & Construction Co., Ltd. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re WESTINGHOUSE ELECTRIC COMPANY LLC, et. al., Debtors. 1 Chapter 11 Case No. 17-10751 (MEW) Jointly Administered Related to Dkt. No. 769 Hearing Date: July 18, 2017 at 11:00 a.m. (ET) Objection Deadline: July 11, 2017 at 4:00 p.m. (ET) 2 OBJECTION OF DOOSAN HEAVY INDUSTRIES & CONSTRUCTION CO., LTD. TO PROPOSED CURE AND FORM OF CONTRACTUAL AMENDMENT IN CONNECTION WITH MOTION SEEKING TO, AMONG OTHER THINGS, ASSUME AND AMEND CERTAIN PURCHASE ORDERS BY WESTINGHOUSE AND GEORGIA POWER CORPORATION, AS AGENT TO THE VOGTLE OWNERS 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, if any, are reportedly: Westinghouse Electric Company LLC (0933), CE Nuclear Power International, Inc. (8833), Fauske and Associates LLC (8538), Field Services, LLC (2550), Nuclear Technology Solutions LLC (1921), PaR Nuclear Holding Co., Inc. (7944), PaR Nuclear, Inc. (6586), PCI Energy Services LLC (9100), Shaw Global Services, LLC (0436), Shaw Nuclear Services, Inc. (6250), Stone & Webster Asia Inc. (1348), Stone & Webster Construction Inc. (1673), Stone & Webster International Inc. (1586), Stone & Webster Services LLC (5448), Toshiba Nuclear Energy Holdings (UK) Limited (N/A), TSB Nuclear Energy Services Inc. (2348), WEC Carolina Energy Solutions, Inc. (8735), WEC Carolina Energy Solutions, LLC (2002), WEC Engineering Services Inc. (6759), WEC Equipment & Machining Solutions, LLC (3135), WEC Specialty LLC (N/A), WEC Welding and Machining, LLC (8771), WECTEC Contractors Inc. (4168), WECTEC Global Project Services Inc. (8572), WECTEC LLC (6222), WECTEC Staffing Services LLC (4135), Westinghouse Energy Systems LLC (0328), Westinghouse Industry Products International Company LLC (3909), Westinghouse International Technology LLC (N/A), and Westinghouse Technology Licensing Company LLC (5961). The Debtors principal offices are reportedly located at 1000 Westinghouse Drive, Cranberry Township, Pennsylvania 16066. 2 Extended by agreement with the Debtors to 5:00 p.m. (ET) on July 13, 2017.
Pg 2 of 8 Doosan Heavy Industries & Construction Co., Ltd. ( Doosan ), by and through its undersigned counsel, files this objection ( Objection ) in the above-captioned chapter 11 cases of Westinghouse Electric Company LLC ( WEC ) and certain of its affiliates (collectively, the Debtors ), to the Motion of the Debtors Pursuant to 11 U.S.C. 363(b), 365(a), and 105(a) for Entry of Order Authorizing Debtors to (I) Enter Into Services Agreement With Vogtle Owners, (II) Assume and Assign Certain Executory Contracts to Vogtle Owners, (III) Assume and Amend Certain Executory Contracts, and (IV) Reject the Vogtle EPC Contract [Dkt. No. 769] (the Motion ). In support this Objection, Doosan respectfully states as follows: PRELIMINARY STATEMENT Doosan generally supports the assumption of its contracts with WEC even with the proposed amendment to add Georgia Power Corporation ( GPC ) (as agent to the Vogtle Owners) as a contract party. Doosan s reason for filing this Objection is to obtain clarification on three primary issues. The first clarification can be simply effectuated by modifying the form of amendment that WEC proposes to use for Doosan s contracts to properly define certain capitalized terms that are presently undefined. The other two clarifications can be accomplished by including the inserts below into the proposed amendment and/or the order approving the assumption. These changes will (i) resolve what may have been unintended ambiguities and (ii) prevent unnecessary and potentially costly disputes in the future. BACKGROUND 3 I. Procedural Posture 1. On March 29, 2017 (the Petition Date ), the Debtors each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ) 3 Capitalized terms used but not defined herein have the meaning ascribed in the Motion. 2
Pg 3 of 8 in the United States Bankruptcy Court for the Southern District of New York (the Court ). The Debtors continue to operate their businesses and manage their properties as debtors and debtorsin-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 2. On June 23, 2017, the Debtors filed the Motion, and attached thereto as Exhibit D a schedule of contracts subject to assumption and amendment. The Doosan contracts identified on Exhibit D consist of (i) purchase order 4500264977 for the construction of steam generators ( Purchase Order 4500264977 ) 4 and (ii) purchase order 4500264953 for the construction of reactor vessel equipment ( Purchase Order 4500264953, 5 and together with Purchase Order 4500264977, the Purchase Orders ). The Purchase Orders are governed by General Terms and Conditions, dated April 11, 2008, respectively annexed thereto as Appendix 1 (as amended, the Terms and Conditions ). 6 3. The Purchase Orders are each listed with a $0.00 cure amount on Exhibit D. 4. As a condition to the proposed assumption, the Debtors seek to amend the Purchase Orders to include GPC as a contract party, which is described in the Motion as the agent to the Vogtle Owners. The form of amendment is attached as Exhibit E to the Motion (the Form of Amendment ). 5. On July 6, 2017, the Debtors filed an amended Exhibit D to the Motion, with no change to the proposed assumption (or cure) of the Purchase Orders. OBJECTION I. Undefined Capitalized Terms Must be Defined 6. First, Doosan seeks clarification of the meaning of two capitalized terms (Vogtle 4 Line 135 on Exhibit D to the Motion. 5 Id. at line 136. 6 Doosan understands that the Debtors are in possession of the respective Terms and Conditions, which are voluminous and thus not attached to this Objection. They are available upon request. 3
Pg 4 of 8 Project and Subcontract Agreement) that do not appear to be defined in Paragraph 5 in the Form of Amendment. Doosan has bracketed the location of the undefined terms in its reprint of Paragraph 5 below. The terms need to be defined in a manner satisfactory to Doosan. II. Retainage Payment Obligations Must be Preserved 7. Second, Doosan seeks the addition of clarifying language in the assumption order and in the Form of Amendment to prevent a future dispute over whether WEC s listing of Doosan s cure amount at $0.00 constitutes a waiver of Doosan s rights to future retainage payments under the Purchase Orders. Doosan is owed retainage amounts under the Purchase Orders in the approximate amount of $9.2 million. 7 Paragraph 6.3 of the Terms and Conditions permitted WEC to retain certain payment amounts under the Purchase Orders. The retainage is subject to payment in the future. To make clear that the Doosan retainage and all other amounts incurred after the Petition Date remain due and owing, Doosan seeks the addition of the following language (in bold) to Paragraph 2 of the Form of Amendment (similar language should also be placed in the assumption approval order): Owners agree to pay and discharge any amounts required to be paid ( Cure Amounts ) to assume this Purchase Order under section 365 of title 11 of the United States Code in the Contractor s bankruptcy cases pending in the United States Bankruptcy Court for the Southern District of New York ( Bankruptcy Court ) and captioned In re Westinghouse Electric Company, LLC, et al., Jointly Administered Case No. 17-10751 (MEW) (the Bankruptcy Cases ), which Cure Amounts have been approved by an Approval Order (as defined below) entered in the Bankruptcy Cases; provided, however, that notwithstanding the foregoing, the Parties and the Owners acknowledge and agree that the Cure Amounts do not include, the (i) amounts retained from the Subcontractor under the respective Appendix 1 General Terms and Conditions, each dated April 11, 2008 (as amended time to time, the Terms and Conditions ), that govern the Purchase Orders and (ii) amounts due and owing under the Purchase Orders that arose after the Bankruptcy Cases filed on March 29, 2017, but such amounts in clauses (i) and (ii) shall remain owing by the Contractor and/or Owners to the Subcontractor and shall become due and payable pursuant to 7 This is an approximate amount only. Doosan reserves all rights with respect to the amount of the outstanding retainage under the Purchase Orders. 4
Pg 5 of 8 the terms of the Purchase Orders, the Terms and Conditions, and/or this Amendment. III. Preservation of Potential Causes of Action 8. Third, Paragraph 5 of the Form of Amendment could unintentionally be read to materially alter Doosan s substantive rights under the Purchase Orders. Proposed Paragraph 5 prevents Doosan from asserting any claims against the applicable Debtor under the Purchase Orders unless and until Doosan first obtains a judgment against the Vogtle Owners. At the same time, the Debtors and Doosan release the Vogtle Owners from certain types of claims detailed in Paragraph 5(a)-(b). To ensure that Doosan s rights to assert the types of claims (if any) identified in Paragraph 5(a)-(b) against the Debtors are preserved under the Purchase Orders, Doosan seeks the addition of the following language (in bold) to Paragraph 5: The Parties acknowledge that Owners shall be severally, not jointly, liable for the payments due under Purchase Order # [NUMBER]; provided, however, that GPC shall act on behalf of all Owners for purposes of the receipt of invoices and aggregating the payments received from the Owners prior to making payment in accordance with the provisions of this Agreement. Each individual Owner is responsible for that percentage of payments Owners are required to pay under Purchase Order # [NUMBER] and this Amendment that is equivalent to such individual Owner s respective ownership interest percentage in the [Vogtle Project] at the time such payment obligation accrues. In the event of any dispute regarding payment under Purchase Order # [NUMBER], Subcontractor agrees not to bring any action against Contractor with respect to any amounts arising under or with respect to the [Subcontract Agreement] unless and until Subcontractor has brought an action against Owners for such payment, has obtained a judgment that Subcontractor is entitled to such amount under or with respect to the [Subcontract Agreement], and has been unable to collect the amount adjudicated to be due despite reasonable efforts to enforce such judgment. Notwithstanding the foregoing, Owners shall not be liable to Contractor or Subcontractor for (a) any claim associated with any injury of or death to natural persons or damage to or destruction of property to the extent that such injury, death or damage is proximately caused by or arising out of the negligence or willful misconduct of Contractor; or (b) any claim arising out of Contractor s, Subcontractor s, or their representatives (i) failure to comply with applicable law, (ii) reckless or intentionally wrongful conduct, including activities or actions that Contractor or Subcontractor knows are contrary to Owners written direction or position, which are not contrary to applicable law or the terms of Purchase Order # [NUMBER], 5
Pg 6 of 8 or (iii) actions other than those taken pursuant to Purchase Order # [NUMBER]; provided, however, that any and all disputes or claims by and between Contractor and Subcontractor with respect to the subject matter of the foregoing subsections 5(a) and 5(b) shall be governed and resolved by the terms of the Purchase Orders and/or the respective Terms and Conditions. RESERVATION OF RIGHTS 9. Doosan reserves all rights, claims, defenses, and remedies, including, without limitation, to supplement and amend this Objection, to raise further and other objections, to introduce evidence prior to or at any hearing regarding the Motion in the event Doosan s objections are not resolved prior to such hearing, or to seek to introduce documents or other relevant information in support of the positions set forth in this Objection. WHEREFORE, Doosan respectfully requests that the Court condition assumption and amendment of the Purchase Orders on the modifications requested herein and grant such other and further relief as may be just and proper. Dated: July 13, 2017 New York, New York SHEPPARD MULLIN RICHTER & HAMPTON LLP By: /s/ Craig A. Wolfe Craig A. Wolfe, Esq. Jason R. Alderson, Esq. 30 Rockefeller Plaza New York, New York 10112 Tel: (212) 653-8700 Fax: (212) 653-8701 E-mail: cwolfe@sheppardmullin.com E-mail: jalderson@sheppardmullin.com Counsel to Doosan Heavy Industries & Construction Co., Ltd. 6
Pg 7 of 8 CERTIFICATE OF SERVICE I hereby certify that on July 13, 2017, I caused a true and correct copy of the foregoing Objection to be served (i) via ECF e-mail to all parties receiving electronic transmission in these bankruptcy cases and (ii) upon the persons listed below via first class mail, postage pre-paid and/or electronic mail. Dated: July 13, 2017 New York, New York By: /s/ Jason Alderson Jason R. Alderson, Esq. 30 Rockefeller Plaza New York, New York 10112 Tel: (212) 653-8700 Fax: (212) 653-8701 E-mail: jalderson@sheppardmullin.com WEIL GOTSHAL & MANGES, LLP 767 Fifth Avenue New York, NY 10153-0119 Attn: Gary T. Holtzer Garrett A. Fail Robert Lemons TOGUT, SEGAL & SEGAL LLP One Penn Plaza New York, NY 10119 Attn: Albert Togut PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 1285 Avenue of the Americas New York, NY 10019-6064 Attn: Jeffrey D. Saferstein PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 2001 K Street NW Washington, DC 20006-1047 Attn: Claudia R. Tobler 7
Pg 8 of 8 SHEARMAN & STERLING LLP 599 Lexington Avenue New York, NY 10022-6069 Attn: Fredric Sosnick Ned Schodek SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 300 South Grand Avenue, Suite 3400 Los Angeles, CA 90071 Attn: Van C. Durrer II Annie Li UNITED STATES TRUSTEE Office of the United States Trustee U.S. Federal Office Building 201 Varick Street, Room 1006 New York, NY 10014 Attn: Paul Schwartzberg PROSKAUER ROSE LLP Eleven Times Square New York, NY 10036 Attn: Martin J. Bienenstock Timothy Q. Karcher Vincent Indelicato 8