USEC Expects to File for Bankruptcy

Enriched uranium supplier USEC (NYSE:USU) said that it expects to file for bankruptcy protection as part of its deal with bondholders.

In a Monday news release, the company, which has been posting losses for the past four quarters, said it has agreed to replace $530 million worth of convertible debt — set to mature in October 2014 — with new debt and equity worth $200 million. According to the company’s statement, the new debt issue will mature in five years and automatically extend an additional five years if certain events occur. USEC anticipates filing its Chapter 11 petition in Q1 2014 and hopes to continue operations and meet its obligations to stakeholders throughout the restructuring period.

USEC has plans to keep testing prototype centrifuges and build more of them in order to offer uranium enrichment on a commercial basis. However, as The New York Times states, “market for enrichment has gone soft as many nuclear reactors have closed.” As such, USEC has stated that the project — which was supposed to cost $1.7 billion and be completed in 2005 — will cost $6.5 billion and will not be completed until at least 2017.

Currently, USEC is building the American Centrifuge plant in Ohio, which was 80 percent funded by the US Department of Energy. The project was slated to be completed this month; funding for the project will end in January.

On the back of the news, USEC’s share price has dropped more than 50 percent. From a Monday high of $5.15, USEC is currently trading at $3.41.