American Centrifuge under 'standstill agreement'

01 July 2011

Without having secured a loan guarantee before a deadline agreed last year, USEC has announced a new 'standstill' arrangement with its investors, Toshiba and Babcock & Wilcox (B&W).

 

USEC's American Centrifuge is to be a 3.5 million SWU per year capacity uranium enrichment plant at Piketon, Ohio, but progress towards this has been dogged by problems with the large centrifuge units as well as finance. In 2009 the US Department of Energy (DoE) refused to support the project with $2 billion in guarantees that would protect private lenders against the cost of any delays in construction due to government fault. Negotiations with the DoE resulted in a set of 15 milestones for USEC to prove the viability of the project and justify the loan guarantee. The majority of these have been met, with some of the timelines being revised.

 

Last year USEC turned to Toshiba and B&W, who immediately injected $75 million into the American Centrifuge and agreed a second installment of $50 million if the DoE gave conditional approval for a loan guarantee before the end of June 2011.

 

This deadline passed yesterday, prompting USEC to explain the current status of its deal with Toshiba and B&W. A 'standstill agreement' is in force, it said, which gives another six weeks to secure conditional approval for the loan guarantee.

 

The three companies have agreed not to exercise their right to end their deal until 15 August. If USEC secures the conditional approval for the guarantee by then it will receive the $50 million, and a third payment of $75 million would come when the loan guarantee is finally approved.

 

In return for these investments, Toshiba and B&W are receiving "convertible preferred stock as well as warrants to purchase shares of common stock, which would be exercisable in the future." Furthermore, B&W would secure a contract to manufacture the centrifuge units while Toshiba would use USEC as the source of enriched uranium to support its reactor sales.

 

The last published schedule for the project foresaw commercial operations in May 2014; reaching 1 million SWU per year capacity in August 2015; and achieving annual capacity of about 3.5 million SWU in September 2017.

 

In parallel, USEC has agreed a ten-year supply of low-enriched uranium (LEU) from Tenex of Russia. USEC said in March: "By supplementing its domestic capacity with continued access to Russian LEU, USEC can assure customers that its supply mix will remain sufficiently robust to meet their needs throughout the transition to the American Centrifuge plant."
 
Researched and written
by World Nuclear News
 

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