Kenneth Fletcher
NS&D Monitor
7/3/2014

USEC’s stock share price saw a rapid rise this week, quadrupling on the heels of notice of additional $2.5 million in funding for American Centrifuge, though the program still only has enough money for about another week. USEC’s share price stood at about $11 at the July 2 market close, about 400 percent of where it stood at the start of the week at $2.75. Notably, USEC also saw its stock skyrocket in the summer of 2013 only to fall again to previous levels. This week’s activity triggered a July 1 statement from USEC: “In view of the unusual market activity in the company’s stock today, the New York Stock Exchange contacted the company in accordance with its usual practice. The company stated that its policy is not to comment on unusual market activity.”

Late last week USEC said that it received an additional $2.5 million in funding from the Department of Energy, which will fund until July 11 the current American Centrifuge program that is being managed out of Oak Ridge under a subcontract to USEC. DOE is still awaiting for Congressional approval of its request to reprogram about $30 million in National Nuclear Security Administration funds to support the American Centrifuge Project through the remainder of the fiscal year.  USEC is currently continuing work on the American Centrifuge Project under an 18-month subcontract with Oak Ridge National Laboratory that began in May and is expected to amount to $33.7 million this fiscal year.

USEC Stock Activity Met With Skepticism

USEC finished in May a two year research, development and deployment cost-share program with the Department. Though that program was successful in meeting milestones to prove the viability of the technology, given current market conditions USEC is not able to commercialize the plant and has filed for Chapter 11 bankruptcy, and the company has a key hearing in bankruptcy court next week. Under the terms of the program, DOE was able to take over management of the technology and launch the new program under ORNL management.

Some stock analysts reacted to this week’s USEC activity with skepticism. “USU needs an incremental $4 billion to complete its critical American Centrifuge Project and as such, $2.5 million does little to assist with this project,” one analyst posted on the stock market news site Seeking Alpha. “When considering the company’s upcoming bankruptcy, $2.5 million moves the needle very little in context of refinancing the $530 million of bonds outstanding. It is my view that the recent appreciation in the stock is backed by misplaced excitement and that the stock will revert to fundamental valuation in no time. Other than this, nothing has changed with the stock or the company in the past few days.”

Senate Approps Looks to Provide $110 Million For American Centrifuge

Additionally, Senate appropriators are looking to provide $110 million to the Department of Energy in Fiscal Year 2015 to continue supporting the American Centrifuge technology, according to draft legislation obtained by NS&D Monitor. The current ORNL program has two six-month option periods in FY’15 totaling $84 million. The Senate Energy and Water Appropriations Subcommittee only made top-line funding numbers public after a markup early this month, and with its version of the bill stalled due to turmoil in the Senate the outcome of the FY 2015 legislation remains uncertain.

While the Oak Ridge program only aims to monitor existing centrifuges, the draft legislation specifies that none of the funds “may be used to build a train of centrifuges using domestic enrichment technology for national security needs in fiscal year 2015.” USEC has suggested that the government could support building an enrichment plant using the technology that would solely be used for security purposes such as tritium production. The lawmakers also would call for an assessment of “why the current inventory of available unobligated enriched uranium is not sufficient to meet defense needs” as well as “a cost benefit analysis of each of the options available to supply enriched uranium for defense purposes, including new bilateral agreements.”