USEC Inc. announced that it has entered into a standstill agreement with its strategic investors Toshiba Corporation (Toshiba), acting through its U.S. subsidiary Toshiba America Nuclear Energy Corporation, and Babcock & Wilcox Investment Company (B&W) to provide a limited additional period of time to obtain a conditional commitment from the U.S. Department of Energy (DOE) for a $2 billion loan guarantee to build the American Centrifuge uranium enrichment plant in Piketon, Ohio. During this limited period, USEC expects to work with DOE to complete the loan guarantee review process and obtain a decision from DOE on the conditional commitment by the end of July 2011.
"USEC has been working diligently with DOE over the past several months to conclude the review process for our loan guarantee application, and we appreciate the attention they are giving to the matter. We are working hard toward a successful conclusion, but we have not been able to conclude the conditional commitment process before June 30, which was the outside date for the next stage of the Toshiba and B&W investment. This standstill agreement provides the limited additional time needed for DOE to complete its review and reach a decision during July," said John K. Welch, USEC president and chief executive officer.
Under the Securities Purchase Agreement dated May 25, 2010, Toshiba, B&W and USEC each had the right to terminate its obligations under the agreement if the $50 million second phase of the strategic investment by Toshiba and B&W did not close by June 30, 2011. Obtaining a conditional commitment for the DOE loan guarantee is the key remaining condition to closing of the second phase of the Toshiba and B&W investment. Under the Standstill Agreement, each of USEC, Toshiba and B&W agreed not to exercise its right to terminate the Securities Purchase Agreement prior to August 15, 2011. This standstill provides a limited additional period of time to finalize and enter into the DOE conditional commitment and then close the second phase of the strategic investment.
Background
USEC applied for a $2 billion loan guarantee from DOE in 2008 to build the American Centrifuge Plant (ACP) in Piketon, Ohio that will support approximately 8,000 U.S. jobs during construction. When complete, the ACP will provide low enriched uranium to fuel nuclear power reactors in the United States and internationally.
The American Centrifuge Plant will use USEC's AC100 centrifuge machine, which has been developed and engineered and will be manufactured in the United States. The AC100 design is a disciplined evolution of classified U.S. centrifuge technology originally developed by DOE and successfully demonstrated during the 1980s. USEC has invested approximately $2 billion in the American Centrifuge Project to date.