DOE, B&W to Look at American Centrifuge Alternatives
Kenneth Fletcher
RW Monitor
3/7/2014
USEC filed for Chapter 11 bankruptcy this week after reaching an agreement with the majority of bondholders and investors on its financial restructuring plan. The moves comes after the company announced in December it planned to file for bankruptcy due to a market downturn, but it would need to convince its bondholders that it had a viable path for commercialization of the American Centrifuge Plant. But USEC has said that it will need additional government support to continue American Centrifuge and DOE funding currently runs out next month. The Department is currently looking at alternatives to USEC, and has been in talks with B&W about continuing the project without USEC.
The restructuring plan was approved by about 65 percent of USEC’s bondholders as well as lead investors Toshiba and B&W. The move was necessary, the company said, because it has $530 million in convertible notes due in October and the 2011 Fukushima incident changed the uranium market outlook—making near-term repayment impossible. The company is hoping for an upswing in the market that will allow it to repay its debt in a few years. The reorganization would replace 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 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 expects court approval of the plan in 90 to 120 days.
USEC says the bankruptcy filing will not impact 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.”
DOE, B&W in Talks On Enrichment Alternatives
While USEC undergoes its restructuring, DOE is undertaking a cost-benefit analysis of options for domestic uranium enrichment technologies for national security needs, The Department has been supporting USEC’s American Centrifuge technology through a research, development and deployment cost-share program, making the case to lawmakers that a domestic enrichment capacity is needed for national security needs such as tritium production. But Congress has made $56 million in additional funding for the program contingent on an assessment of other options for a domestic enrichment capacity. One potential alternative to USEC that is being considered after talks between B&W and DOE would involve B&W building American Centrifuge machines to develop an enrichment plant for solely national security needs.
B&W Technical Services in partnership with USEC currently runs the program’s centrifuge manufacturing facility in Oak Ridge. B&W has also been a key investor in USEC’s American Centrifuge plant. Under the Department’s current agreement with USEC, if the company is unable to commercialize the plant the government has the option to take over the rights to the technology. When USEC announced its plans to file for bankruptcy, it proposed that the government could fund a USEC-led effort to build a “national security train” plant to fulfill the government’s enrichment needs. B&W declined to comment on the issue.