USEC Inc. (USU), a global nuclear fuel and technology company, today announced that nuclear industry leaders Toshiba Corporation and Babcock & Wilcox Investment Company, an affiliate of The Babcock & Wilcox Company (B&W), have signed a definitive agreement to make an investment in USEC over three phases, each of which is subject to satisfaction of specific preconditions, including regulatory approvals. The $200 million investment, shared equally between Toshiba and B&W, will strengthen USEC’s financial position for the deployment of the American Centrifuge Plant and create key new business opportunities throughout the nuclear fuel cycle.
“This is a historic day for USEC. This agreement will strengthen USEC as a global energy leader that delivers nuclear fuel and related services on a reliable, competitive basis. In addition, the strategic relationship between our companies will create new business opportunities across the entire nuclear fuel cycle,” said John Welch, USEC president and CEO.
“In preparation for updating our Department of Energy loan guarantee application to finance the American Centrifuge, we have worked hard to successfully demonstrate the American Centrifuge uranium enrichment technology and, as indicated by today’s announcement, to improve the financial foundation for the project and the company.”
“We’re proud to have support from two of the most successful nuclear energy companies in the world and are excited about what new value this strategic alliance will bring to our customers and shareholders. By working with Toshiba Corporation and Babcock & Wilcox, USEC will benefit from their vast technical knowledge and experience across the nuclear fuel cycle,” said Welch.
Under the terms of the agreement, Toshiba and B&W will each invest $100 million in USEC, spread out over three phases, each subject to certain closing conditions. The first phase is expected to close upon completion of specific closing conditions and obtaining necessary regulatory approvals. This is expected to occur in the third quarter of 2010. For their investment, the companies would receive convertible preferred stock as well as warrants to purchase shares of common stock, which would be exercisable in the future.
“We have decided to make this investment in American know-how and American technology in order to produce more uranium fuel for the growing worldwide nuclear power market with high confidence in USEC as a leading supplier of low enriched uranium,” said Yasuharu Igarashi, corporate senior vice president of Toshiba. “The nuclear renaissance is moving forward and this investment will help power its growth by securing the supply of uranium fuel for existing and potential customers.”
All three companies have agreed to work together on additional strategic business opportunities. Under the arrangement, USEC could provide enriched uranium for bundling with Toshiba’s nuclear power plant proposals. USEC and B&W also plan to complete the joint venture announced last year to manufacture USEC’s commercial AC100 centrifuge machines for the American Centrifuge Plant.
USEC intends to use the funds for general corporate purposes and for investment in the American Centrifuge Plant. USEC is operating a cascade of centrifuge machines in a commercial plant configuration, collecting data and experience in preparation for transitioning into full commercial operations.
The initial phase investment would help USEC continue to advance deployment of the American Centrifuge Plant during 2010. USEC anticipates it will update its DOE loan guarantee application sometime this summer and, as the department has made clear, $2 billion in federal budget loan authority remains available under the 2008 solicitation for Front End Nuclear Fuel facilities.
If successful in obtaining a loan guarantee, the American Centrifuge Project could create at the peak of construction nearly 8,000 jobs in the U.S., with almost half located in Ohio.