Source:
Dow JonesUSEC Inc. (USU) said Tuesday that the U.S. Department of Energy won't proceed with the nuclear-fuel supplier's application for a loan guarantee to finish building a uranium-enrichment facility, sending the company's shares plummeting nearly 50%.
The Bethesda, Md.-based company said in a press release that it has started to demobilize the American Centrifuge Plant in Piketon, Ohio, and engaged outside advisors to evaluate "strategic alternatives." USEC said it invested $1.5 billion in the project and offered $1 billion of additional corporate support. It added that the application with the DOE has been pending for a year and the company has addressed concerns raised by the department.
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Jefferies & Co. cut its rating on the company's shares to hold from buy on the news. Analyst Laurence Alexander said in a note to clients that the application for $2 billion in funding "was key for USEC to move forward on the construction" of the project. "Without the DOE funding, we expect USEC will have to seek alternative financing sources."
Shares of USEC were recently down 33% at $4.13 after reaching a low of $3.22 earlier in the day.
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Good - "a review indicated the project was not ready":
USEC loan guarantee application rejected; shares plungeWashington Business Journal - by Tucker Echols Staff Reporter
The Department of Energy has decided not to proceed with consideration of a loan guarantee application from USEC Inc. for a new uranium enrichment facility in Ohio, triggering a plunge in the price of the Bethesda firm's stock.
The Department of Energy said Tuesday that it was encouraging USEC to withdraw its application for $2 billion in loan guarantees to complete the American Centrifuge Plant in Piketon, Ohio giving the company time to resolve technology issues facing the plant in the next 12 to 18 months without hurting the chances for future approval.
USEC, which has invested $1.5 billion in developing the plant and warned in June that it would not be able to continue work without the guarantees because private financing would not be available, responded to the decision by saying it would initiate steps to demobilize the project. USEC said the company had addressed all concerns raised by DOE while the application had been pending over the last year and it was, "shocked and disappointed" by the decision.
DOE said it saw promise in the ACP technology as a next generation uranium enrichment technology but that a review indicated the project was not ready to move to commercial scale operations and the loan application was therefore unlikely to be approved. Because of project's upside potential, DOE said it would offer up to $45 million over the next 18 months to support ongoing research and development work at ACP. DOE said the funds would allow USEC to continue operations, maintenance, and research at Piketon as well as another facility in Oak Ridge, Tenn.
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