“Deployment of this innovative American technology will support thousands of U.S. manufacturing and operations jobs and will contribute to our energy security and national security at a pivotal time for our country.” said USEC President and CEO John K. Welch
USEC Inc. announced today that it had reached a significant step in the Company's application for a $2 billion loan guarantee from the U.S. Department of Energy (DOE) for the American Centrifuge Plant. DOE's Loan Guarantee Program Office has substantially completed the due diligence and negotiation stage of the application process and has advanced the American Centrifuge Plant application to the next phase.
USEC's application now proceeds with a draft credit package, including the negotiated term sheet, having been submitted on parallel paths to DOE's credit group and to the Office of Management and Budget (OMB) for review, including determination of an estimated preliminary credit subsidy cost range. The term sheet, which was negotiated between DOE's Loan Guarantee Program Office and USEC, includes specific terms and conditions USEC must meet to close on a loan guarantee for the advanced uranium enrichment facility. Following this review and approval by DOE's Credit Review Board, the Secretary of Energy would be positioned to issue a conditional commitment for a loan guarantee. USEC would then work with DOE to conclude final documentation and satisfy all technical, financial and other conditions to funding in order to close on financing and begin drawing funds.
"This is another important step forward for the American Centrifuge Project that moves us closer to getting a loan guarantee," said USEC President and CEO John K. Welch.
"We worked very closely with DOE throughout the process, and I think we have negotiated terms that will enable us to achieve our goals and objectives and provide strong assurance of repayment of a loan," said Welch. "Deployment of this innovative American technology will support thousands of U.S. manufacturing and operations jobs and will contribute to our energy security and national security at a pivotal time for our country."
"More reviews remain before a conditional commitment can be offered, but we have moved to the next stage of the process and now have a path that makes obtaining a conditional commitment by the end of the second quarter possible. We have made it clear to DOE that prompt action is necessary to keep the project on a path for deployment," said Welch. "The establishment of a reasonable range for the credit subsidy cost is also critical."
The terms of USEC's credit facility limits spending on the American Centrifuge Project absent additional investment of capital. The second phase of an investment involving an additional $50 million by Toshiba Corporation (Toshiba) and The Babcock & Wilcox Investment Company (B&W) is conditioned upon receipt by USEC of a conditional commitment by June 30, 2011. USEC anticipates that it will need to obtain the conditional commitment and close on the second phase of the Toshiba and B&W investment during the second quarter of 2011 in order to maintain the current spending level on the American Centrifuge Project while complying with its credit facility covenants. If USEC does not close on the second phase of that investment by June 30, each party has the right to terminate its obligations under the securities purchase agreement. USEC will continue to manage the pace of its investment in the American Centrifuge to maintain adequate liquidity for its business and to ensure that it remains within the American Centrifuge Plant spending limits in its credit facility.
USEC is investing in advanced centrifuge technology to provide a long-term, reliable and secure fuel source for U.S. and international nuclear power plants. As the only domestic enrichment facility using U.S. centrifuge technology, the American Centrifuge Plant will also help to rebuild U.S. nuclear manufacturing capabilities. This multi-year construction project would create nearly 8,000 U.S. jobs in more than ten states.
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.