Usec Will File for Bankruptcy

Usec, a uranium enrichment company spun off the Department of Energy in 1992, announced it will declare bankruptcy next quarter.

The American Centrifuge Project. Source: UsecIn a release Monday, the company said it will restructure its debt and force a significant loss on current stock holders. Note holders that own $530 million of the company's debt will likely receive new bonds totaling $200 million, plus most of the newly issued common stock. Investors Toshiba and Babcock & Wilcox would receive 16 percent of the new equity, while existing stockholders would receive 5 percent of the new common stock. Usec said it continues to negotiate with Toshiba and B&W on their part of the deal. Once the restructuring is complete, Usec's board of directors will be replaced.

The company ran the DOE's Paducah Gaseous Diffusion Plant, which stopped operations earlier this year. It had planned to continue providing the only enrichment services in the country controlled by a U.S. company at its American Centrifuge Project in Piketon, Ohio. That endeavor has been in limbo, though, after initially being denied a $2 billion DOE loan guarantee in 2009. Since then, the agency has funded a research and demonstration project to continue development of the centrifuge technology, which is significantly more efficient than the method used at Paducah.

It's unclear what effect the bankruptcy will have on the congressional support critical to American Centrifuge. In its announcement, Usec said it plans to continue the research project after the reorganization.

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