USEC TO FILE FOR BANKRUPTCY UNDER FINANCIAL RESTRUCTURING PLAN

USEC will file for Chapter 11 bankruptcy in the first quarter of 2014 under a financial restructuring plan agreed to by a majority of the holders of its senior convertible notes, the company said today. Under the terms of the agreement, the company will replace approximately $530 million in convertible notes that are scheduled to mature in October 2014 with new debt and equity. “We are pleased to reach agreement with a significant number of our noteholders on a plan to improve our capital structure and enhance our ability to be a stronger sponsor of the American Centrifuge project,” said John K. Welch, USEC president and chief executive officer. “We have said for many months that we are transitioning our business to focus on our core strengths, and today’s announcement represents another important step in that process.”

 

Throughout the restructuring process, USEC said it expects to continue its operations and to meet its obligations to its stakeholders, including suppliers, partners, customers and employees. The company also anticipates the continuation of research, development and demonstration activities for the American Centrifuge technology, as well as the transition activities at the Paducah Gaseous Diffusion Plant by United States Enrichment Corporation, which is the primary operating subsidiary of USEC Inc. “Discussions continue with the Babcock & Wilcox Investment Company (B&W) and Toshiba Corporation regarding agreement to restructure their preferred convertible equity investment,” USEC said in a statement this morning. “The noteholders and USEC have made a proposal regarding restructuring the Toshiba and B&W investment and the parties are in discussions on those terms and documentation which must be completed prior to implementing the financial restructuring plan. As strategic investors, Toshiba and B&W remain supportive on deployment of the American Centrifuge Plant.”

 

The agreement with the noteholders, which includes the participation of financial institutions representing approximately 60 percent of the company’s debt, calls for the company’s $530 million debt to be replaced with a new debt issue totaling $200 million, according to a USEC release. The new debt issue would mature in five years and automatically extend an additional five years upon the occurrence of certain events. In addition, the restructuring plan contemplates that the existing equity will be replaced with new equity. The noteholders would receive 79 percent of the new equity as common stock. The plan calls for Toshiba and B&W to jointly obtain 16 percent of the new common stock, as well as $40 million in debt on the same terms as the noteholders, in exchange for their existing preferred equity investment. Existing stockholders would receive 5 percent of the new common stock.

 

In order to implement the terms of the agreement, USEC Inc. said it expects to file a prearranged and voluntary Chapter 11 petition for relief in the United States Bankruptcy Court for the District of Delaware in the first quarter of 2014. It is anticipated that none of the company’s subsidiaries will be filing for relief. United States Enrichment Corporation is anticipated to be a plan proponent for a limited purpose, but will not be included in the Chapter 11 filing. Such a filing is not expected to have any effect on on-going operations, suppliers, deliveries to customers or the American Centrifuge research, development and demonstration program. “Under terms of the agreement, the current USEC Board of Directors would oversee the restructuring process until the effective date of the plan when a new board would take its place,” USEC said in a release. “The new directors will all be U.S. citizens, except and to the extent that mitigation measures acceptable to the Nuclear Regulatory Commission and DOE are in place. We expect B&W and Toshiba to continue to have representation on the board of directors.”