A financial filing from USEC yesterday raised uncertainty about the future of the company as it reported a hefty loss of $1.2 billion in 2012, while noting that this month USEC received $44.4 million in additional funding from the Department of Energy. The loss, which is a result of writing off previous expenses on the American Centrifuge project, compares to a loss of about $491 million for 2011. The company is holding an earnings call with investors at 8:30 a.m. today, and its stock sat at $0.39 at the close of business yesterday.
USEC acknowledged last year that previous efforts to obtain a DOE loan guarantee for the project had been unsuccessful. Instead, DOE launched a research, development and deployment cost-share program with the company last year in an effort to improve chances for a loan guarantee, and USEC plans to resubmit its application later this year. But given uncertainty about future ownership of the plant and the great amount that had been spent, it was necessary to write off previous expenses at the end of the year, the company said. “We anticipate that our ultimate share of the ownership of the ACP will likely be reduced by third parties investing capital to complete the ACP, which affects our likelihood of recovering this past investment,” the filing with the Securities and Exchange Commission states. So far, DOE has paid $177.8 million toward the RD&D program to keep it running until June. In a new development, the financial filing revealed that this month DOE paid USEC $44.4 million for low enriched uranium that USEC used in January 2012 as payment to the Department in exchange for DOE taking on some of USEC’s liability. USEC and the Department have not responded to requests for comment in recent weeks on how the project was being funded.
The filing also suggested the possibility of notable upcoming financial changes. “In light of the significant transition of USEC’s business and the uncertainties and challenges facing USEC and in order to improve USEC’s credit profile and its ability to successfully finance and deploy the American Centrifuge project and to maximize USEC’s participation in such project, USEC is engaged with its advisors and certain stakeholders on alternatives for a possible restructuring of its balance sheet,” it states. At the end of the year a USEC independent registered public accounting firm stated that there was uncertainty about USEC’s ability to continue, according to the filing.
Last year the Department negotiated a deal for USEC to reenrich a portion of DOE’s stockpile of depleted uranium tails to keep the Paducah Gaseous Diffusion Plant running through May 2013. But talks to extend that arrangement are ongoing. “We are in discussions regarding the potential for continuing enrichment at Paducah for several months following the completion of the current arrangement at the end of May 2013,” the filing states. It adds, “We are currently in discussions with DOE regarding the timing of our de-lease and are seeking to minimize our transition costs, which could be substantial.” USEC also wrapped up Friday the sale of its subsidiary NAC International to the Hitachi Zosen corporation, which was announced in late January. A subsidiary of Hitachi paid USEC $39.9 million for the business in cash on Friday and also deposited $2.5 million in an escrow account for the deal.
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