Please ensure Javascript is enabled for purposes of website accessibility

Bethesda-based Uranium giant USEC to file for Chapter 11

USEC Inc., the Bethesda-based energy company that supplies enriched uranium fuel for commercial nuclear power plants, announced Monday that it will file for Chapter 11 bankruptcy protection in the first quarter of 2014.

A 20-year-old energy and nonproliferation program under which material for Russian warheads was converted into commercial nuclear fuel ended last week when the final shipment — show here leaving St. Petersburg for the Port of Baltimore — was transshipped to Kentucky.

USEC — the acronym stands for United States Enrichment Corp. — said in a statement the decision to file in U.S. Bankruptcy Court in Delaware won’t affect operations or deliveries to customers.

The company began life 20 years ago as a government corporation within the U.S. Department of Energy to handle uranium enrichment for civilian use. It was privatized five years later in a deal worth more than $3 billion to U.S. taxpayers.

At the time, it employed about 5,000 people and had operations in 14 countries. At the end of 2012, it reported just 1,770 employees, only 88 of them at its Bethesda headquarters.

USEC has a high profile because of the work it does. It oversaw the transfer to the United States of more than 14,000 metric tons of low enriched uranium from nuclear warheads in the former Soviet Union under the Megatons to Megawatts Program, for example; the last cylinders of uranium were transshipped through the Port of Baltimore en route to its plant in Paducah, Ky., on Dec. 12.

But USEC’s plans for uranium-enrichment facilities in the Midwest using gas-centrifuge technology have run into money problems. In its statement Monday, USEC said it plans to replace $530 million in convertible notes that are scheduled to mature in October 2014 with $200 million in new debt.

“We are pleased to reach agreement with a significant number of our noteholders on a plan to improve our capital structure and enhance our ability to be a stronger sponsor of the American Centrifuge project,” said John K. Welch, USEC’s president and chief executive officer, referring to a decade-long plan to develop the new technology at a plant under construction in Piketon, Ohio.

“We have said for many months that we are transitioning our business to focus on our core strengths, and today’s announcement represents another important step in that process,” Welch said.

In its most recent quarterly filing with the Securities and Exchange Commission, in November, USEC said its business was “in a state of significant transition.”

“We will be a significantly smaller company with lower revenues as we transition from having two sources of supply that provided approximately 10 to 12 million SWU (‘separative work units,’ an industry measurement that represents the effort required to transform a given amount of natural uranium into its two components, enriched and depleted) per year to making sales from our existing inventory, from future purchases of LEU from Russia at lower quantities and from other potential sources of supply,” the filing said.

“We continue to pursue commercialization of the American Centrifuge technology, which we believe is the best path to remaining a competitive producer of (low enriched uranium) in the long term. … However, current enrichment market conditions do not support a viable business plan for obtaining the capital needed for the commercialization of the American Centrifuge project.”

USEC said it finished building a commercial demonstration cascade in Piketon last spring and started preparing the plant for machine installation and the installation of new infrastructure.

USEC stock closed Monday at $3.51 on the New York Stock Exchange, off $5.30 — about 60 percent — from its Friday close. Volume was just shy of 3.8 million shares, almost six times the average daily volume for the last 90 days.