Daily News: March 5, 2014

Lazard, Others Advise USEC on Restructuring

USEC announced it is implementing the agreement reached with a majority of the holders of its senior unsecured convertible notes, announced in December 2013 and setting forth the terms of a financial restructuring plan to strengthen the company’s balance sheet, enhance its ability to sponsor the American Centrifuge project and improve its long-term business opportunities. The company also reached agreement with its preferred equity investors — Toshiba Corporation and The Babcock & Wilcox Company — to support the restructuring plan.

USEC’s legal advisor for the restructuring is Latham & Watkins, its financial advisor is Lazard, and its restructuring advisor is AlixPartners. An ad hoc group of holders of USEC’s senior convertible notes is advised by Akin Gump Strauss Hauer & Feld and Houlihan Lokey.

In order to implement the agreement, USEC filed a voluntary petition and a plan of reorganization under Chapter 11 of the bankruptcy code in the U.S. Bankruptcy Court for the District of Delaware. USEC anticipates receiving court approval for its prearranged plan of reorganization and emerging from Chapter 11 in 90 to 120 days. None of USEC’s subsidiaries, including its primary operating subsidiary the United States Enrichment Corporation, have filed for bankruptcy protection.

The company had positive cash-flow from operations in 2013 and ended the year with a cash balance of $314 million. During the restructuring process, USEC’s subsidiary, the United States Enrichment Corporation, will provide debtor-in-possession (DIP) financing to USEC that will support continued operations. No third-party DIP financing will be required. After meeting its significant payables in the first quarter, the company anticipates a cash balance of at least $60 million at March 31, 2014.

This filing has no impact on USEC’s daily operations, which includes the company’s efforts to deploy the American Centrifuge uranium enrichment technology and perform the research, development and demonstration program partially funded by the U.S. Department of Energy. As a non-debtor, United States Enrichment Corporation’s operations, which include the transition of the Paducah Gaseous Diffusion Plant back to the U.S. Department of Energy (DOE) and the sale of SWU from its inventory and purchases of Russian low enriched uranium, continue unaffected.

“By addressing the October 2014 maturity of the convertible notes, USEC will be able to pursue its ongoing business objectives with greater certainty,” said John K. Welch, USEC president and CEO. “The restructuring will strengthen USEC’s balance sheet and enhance the company’s ability to sponsor the American Centrifuge project. Throughout this process our operations will continue. We will continue to make customer deliveries, execute the RD&D program and continue progress on transitioning the Paducah GDP.”

The current USEC board of directors will oversee the restructuring process until the effective date of the plan when a new board would take its place. B&W and Toshiba each retain the right to representation on the board of directors.

USEC, a global energy company, is a supplier of enriched uranium fuel for commercial nuclear power plants.