ENERGYSOLUTIONS DETAILS ZION RISKS IN NEW PROXY

The profitability of the Zion project is entirely dependent on future project costs and the decommissioning trust fund, EnergySolutions wrote. An increase in costs or a depreciation in the fund would result in a loss on the project. "Because there are over seven years remaining on the Zion project, there can be no assurance that our current estimates, assumptions and projections will prove accurate and all such forward-looking statements, including our projection of the Zion project’s profitability, could change materially," EnergySolutions wrote in the proxy. "Our estimates, assumptions and projections are necessarily dependent upon future economic, market and other conditions over which we have no control. Accordingly, the expected profitability of the Zion project is uncertain. In the event actual project costs are higher than total realized [decommissioning fund] levels, we will realize no profit on the project and could incur a substantial loss that could have a material adverse effect on our business, financial condition and results of operations."

EnergySolutions also wrote that they do not expect Exelon to release the company from its $200 million letter of credit associated with the Zion project, a source of significant financial strain for EnergySolutions. There’s also the possibility of financial penalties—up to $5 million per month—if EnergySolutions fails to meet milestones in 2015, 2016, and 2017. However, EnergySolutions wrote it is currently on track to meet those milestones. And if the project takes more than 10 years, additional rent costs to EnergySolutions would start at $200,000 per month for the first year, increasing each additional year. "To the extent that any of these deficiencies or events of default occur, there will be a substantial impact to our operations and financial condition because we have the contractual obligation to fund the operations of ZionSolutions if costs exceed the value of the trust fund," the company wrote.

One detail shareholders had requested was further information on which EnergySolutions Board members made up the special committee tasked with analyzing potential acquisition offers. In Friday’s proxy the company said that initial committee was made up by Setven Rogel, J. Barnie Beasley, Jr., and David Lockwood—prior to his being named CEO of the company in June. However, that group stopped meeting after interest in acquisition offers waned in early 2012. When the company decided to grant ECP an exclusive right to field a deal for the company in December 2012, EnergySolutions formed a new review committee, made up of: J.I. Everest II, J. Barnie Beasley Jr., Robert Whitman, David Winder and Steven Rogel. That detail appears to assuage some shareholder concerns that Lockwood was enlisted in a special committee reviewing ECP’s offer while serving as CEO, creating a potential conflict of interest. The proxy details discussions among independent board members regarding replacing then-CEO Val Christensen with board member Lockwood, a plan which was enacted June 11. "Our board of directors determined, after significant deliberation, that the Company needed new leadership in order to position the Company to take advantage of its long-term potential and overcome the challenges it faced," the company wrote.