American Centrifuge Plant

US-based Uranium Producer USEC has filed for bankruptcy in response to weak uranium prices and uncertainty regarding the funding of a major project.

The price of low-enriched uranium has dropped by more than 30% since March 2011, when Japan was struck by a tsunami, which led to the closure of the nuclear power plant in Fukushima.

In addition, more than 50 nuclear power reactors in Japan and Germany have been shut down, and the resulting oversupply caused nuclear fuel prices to drop to their lowest levels in a decade.

As a result of the oversupply of nuclear fuel, USEC faced delays in obtaining permanent financing for construction of its American centrifuge plant in Ohio.

Production of uranium at the American centrifuge plant was vital to the company, as it had stopped enriching uranium at two gaseous diffusion plants leased from the US Department of Energy (DOE).

In a bankruptcy filing, USEC said that it had invested about $2.5bn to develop the plant and requires an additional $4bn to complete it.

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By GlobalData
"USEC expects to emerge from bankruptcy protection in 90 to 120 days."

While the company was expecting a $2bn loan guarantee from the DOE, the government outlined a cost-sharing programme to demonstrate the capability of the centrifuge technology.

USEC noted that it expects to emerge from bankruptcy protection in 90 to 120 days.

The company also announced a re-organisation plan, which is supported majority of noteholders and by investors, Toshiba and Babcock & Wilcox Investment.

Under the new plan, Toshiba and Babcock will each receive $20.19m of new debt and 8% of the new shares, while the noteholders will receive $200m of new debt and a 79% stake in the restructured company.

USEC stockholders will receive 5% of the new shares under the reorganisation plan, which is pending court approval.

The company noted that this filing has no impact on USEC’s daily operation, and that it will continue to supply its customers from stockpile.

Based in Bethesda, Maryland, USEC had assets of $70m and liabilities of $1.07bn as of 31 December.

Image: The re-structuring plan will enhance USEC’s ability to sponsor the American centrifuge project. Photo: courtesy of USEC.