Kenneth Fletcher
NS&D Monitor
10/3/2014

As USEC became Centrus Energy Corp. this week after completing Chapter 11 bankruptcy restructuring, in its first major action longtime President and Chief Executive Officer John Welch announced his plans to step down. Welch, who has served as head of the uranium enrichment firm since October 2005, plans to leave on Oct. 17. The company’s board of directors has launched its selection process for a new CEO using executive search firm Spencer Stuart, while in the meantime Chief Restructuring Officer John Castellano will serve as interim president and CEO. “After successfully demonstrating the benefits of the American Centrifuge technology and completing the restructuring, Centrus is on track to succeed. After nine years as CEO, this is the right time for me to step down,” Welch said in a statement, adding that he will step down from the board at the same time.

This week marked a major turning point for the beleaguered company as it emerged from its financial restructuring with a new board of directors, which met this week and elected as chairman Mikel Williams, the CEO of composite materials manufacturer of JPS Industries. The firm is implementing a major rebranding effort, starting with the name change from USEC to Centrus that went into effect on Sept. 30. In recent years, a drop in nuclear fuel demand following the 2011 nuclear accident at the Fukushima plant in Japan impacted USEC’s financial outlook.

The company had been pursuing a $2 billion Department of Energy loan guarantee for its American Centrifuge Plant, but withdrew its application and in 2012 entered into a cost-share program with DOE to demonstrate its technology on a commercial scale. When that program wrapped up last spring, DOE took over management of the technology in May and Centrus is currently maintaining American Centrifuge under a subcontract to Oak Ridge National Laboratory. With the shutdown of its Paducah Gaseous Diffusion Plant in 2013, the company’s main source of revenue in recent years has been as a broker for uranium under a supply agreement with Russia. 

New Stock Now Trading Under ‘LEU’ Symbol

In the meantime, facing $530 million in debt that would come due in October 2014, the firm filed for Chapter 11 bankruptcy in March. The financial restructuring that the company completed this week replaces that debt with $240.4 million in new debt that comes due in five years with an option for another five year extension. Noteholders are receiving $200 million of the new debt and 79 percent of the common stock, while preferred investors Toshiba and B&W receive $20.19 million in new debt each and 8 percent of the new stock. The company’s new common stock shares also began trading on the New York Stock Exchange under the ticker symbol “LEU” rather than the previously used “USU” symbol, with a conversion rate of 1,000 shares of USU to 92 shares of LEU.

Centrus Board Mix of Old USEC Board Members and New Members

The company’s new board currently has eight members in addition to Chairman Williams and outgoing CEO Welch. That includes Michael Diament, director of Magellan Health Services, Osbert Hood, Chief Operating Officer of Advent Capital Management, W. Thomas Jagodinski, a private investor, Patricia Jamieson, retired from Keycorp, Suleman Lunat of investment firm M-III Partners, William Madia of the SLAC National Accelerator Laboratory, Michael Morrel retired from Allegheny Energy Supply Company and Hiroshi Sakamoto of Toshiba Nuclear Energy Holdings.

Williams said in a statement: “We have an outstanding mix of directors, including members who served on the previous board and new board members with fresh ideas for Centrus. These directors bring many years of experience and business acumen to the company as we complete the corporate transition smoothly.”