USEC filed for Chapter 11 bankruptcy yesterday after reaching an agreement with investors and the majority of bondholders on its financial restructuring plan. This comes after the company announced in December it planned to file for Chapter 11 due to a market downturn, which made it difficult to address $530 million in convertible notes due in October. The reorganization would replace those notes and all of the company’s stock with $240.4 million in debt due in five years and new common stock. Lead investors Toshiba and B&W are supporting the plan and will each receive about $20.2 million in debt, while the noteholders will receive $200 million in debt and 79 percent of USEC’s stock. USEC’s share price fell about 21 percent in the wake of the announcement to $4.40. USEC expects court approval of the plan in 90 to 120 days.
The company says that the move will not impact USEC’s daily operations at the American Centrifuge Project, the Paducah Gaseous Diffusion Plant and the sale of Russian material, noting that its subsidiaries have not filed for bankruptcy. “By addressing the October 2014 maturity of the convertible notes, USEC will be able to pursue its ongoing business objectives with greater certainty,” USEC CEO John Welch said in a statement. “The restructuring will strengthen USEC’s balance sheet and enhance the company’s ability to sponsor the American Centrifuge project. Throughout this process our operations will continue. We will continue to make customer deliveries, execute the RD&D program and continue progress on transitioning the Paducah GDP.”
