Company to Change Name to Centrus Energy Corp.
Kenneth Fletcher
RW Monitor
8/22/2014
USEC’s noteholders overwhelmingly approved the company’s Chapter 11 Bankruptcy reorganization plan this week, with over 99 percent in favor. The plan still awaits approval by the U.S. Bankruptcy Court for the District of Delaware in a Sept. 5 hearing. If the reorganization is implemented, the company plans to change its name to Centrus Energy Corp., according to a supplement to the reorganization plan submitted to the Securities and Exchange Commission earlier this month. The name change appears to be an attempt by USEC to distance itself from the company’s financial and debt history. “This change will signal the beginning of a new era for the reorganized company,” USEC spokesman Paul Jacobson said. “However, until we emerge from the Chapter 11 process, we will continue to be USEC Inc. Once the Plan of Reorganization is confirmed by the court and the company emerges, more details will be provided regarding the new name.”
USEC filed for Chapter 11 bankruptcy in March due to a bleak near-term commercial outlook for the uranium enrichment market and $530 million in debt due to creditors this October. USEC’s plan calls for a reorganization of the debt due in October, replacing the current notes and all of the company’s stock with $240.4 million in debt due in five years and new common stock. Investors Toshiba and B&W are supporting the plan and would each receive about $20.2 million in debt, while the noteholders will receive $200 million in debt and 79 percent of USEC’s stock. The company is currently maintaining the American Centrifuge technology under a new subcontract to Oak Ridge National Laboratory that has been extended through March 2015. USEC’s hopes are pinned on the commercial market picking up in the coming years.
Company Announces $28 Million Net Loss for 2Q
The company also announced this month that it experienced a net loss of $28 million during the second quarter of this year. Much of the loss stems from activities related to the transition at the Paducah Gaseous Diffusion Plant as USEC prepares the facility for an anticipated return to the Department of Energy in October, as well as expenses for USEC’s reorganization efforts, workforce reductions, advisory costs and advanced technology costs related to demonstration of the American Centrifuge technology. For the six months of 2014, USEC reported a loss of $78.8 million compared to $42.9 million in the same period of 2013. The company brought in $121.2 million in revenue , a decrease of $163.6 million or 57 percent compared to the same quarter of 2013. USEC did however increase its gross profit by $50.4 million in the three months and by $16.2 million in the six months, mainly due to decreases in non-production expenses partially offset by lower SWU sales volume in its LEU segment.
USEC attributed the net loss to the transition at the Paducah GDP and the company’ ongoing bankruptcy reorganization. “During the second quarter, we continued to execute our Paducah transition plan to return the facility to DOE in October, we delivered LEU to our customers on time and in specification, and we earned a gross profit,” USEC President and CEO John K. Welch, said in a statement. “Over the past year, the non-production costs related to preparing the Paducah GDP for return have weighed on our profitability, but we are nearing the conclusion of this process.”
American Centrifuge VP Leaving
Also earlier this month, USEC named Steven Penrod the new Vice President of the company’s American Centrifuge program. He replaces Paul Sullivan, who is set to become director of the Applied Research Laboratory at the Pennsylvania State University, effective Sept. 1. Penrod previously served as Vice President of Enrichment Operations, where he was responsible for USEC’s facilities at Paducah, Ky. and Piketon, Ohio, including the centrifuge demonstration cascade operation in Piketon, according to a company release. “USEC has developed a strong cadre of senior managers and in Steve we have a proven senior executive who achieved outstanding safety, efficiency and productivity levels at the Paducah plant as well as strengthening enrichment operations at ACP,” USEC Chief Operating Officer Robert Van Namen said in a statement. “Steve brought operational expertise from years of enrichment experience at Paducah to help improve procedures at ACP as it transitioned from research and demonstration to cascade operations. He has been closely involved in all aspects of the American Centrifuge program and provides leadership continuity as we take the program forward to the next phase.”
