Bethesda-based nuclear energy provider USEC filed for Chapter 11 bankruptcy protection Wednesday after delays to a major centrifuge project and shifts in the global market made it impossible for the company to repay debt due later this year.
A majority of holders of the company’s senior unsecured notes approved the bankruptcy plan, which was previously announced in December. The company expects to receive court approval and emerge from bankruptcy by this summer.
USEC chief executive John K. Welch said in a statement that the bankruptcy filing will allow the company to “pursue its ongoing business objectives with greater certainty” by strengthening its balance sheet.
The deal calls for the note holders to receive $200 million of new debt and 79 percent of the restructured company’s common stock. Existing shareholders would receive 5 percent of the new common stock as part of the deal.
Toshiba Corp. and the Babcock & Wilcox Co. will each take on $20.2 million in debt and 8 percent of new common stock as part of the arrangement.
The company’s management will remain in place following the bankruptcy, though its board of directors will be replaced, said spokesman Paul Jacobson.
USEC issued $530 million worth of notes in 2007 with the expectation it would repay that money by October of this year. In that time, an economic downturn and natural disaster have dramatically changed the global market for nuclear power, Jacobson said.
The company has been unable to secure a $2 billion loan guarantee and other funding necessary to complete its American Centrifuge Plant. The company had expected the uranium enrichment facility in Piketon, Ohio would be yielding revenue by this point, Jacobson said.
What’s more, the earthquake and tsunami that took out a major nuclear reactor in Fukushima, Japan in March 2011 raised troubling questions about the safety of nuclear power and caused global prices for nuclear fuel to drop.
USEC ended last year with $314 million in cash on its balance sheet.
Follow reporter Steven Overly on Twitter: @StevenOverly