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Uranium Producer USEC Can Seek Creditor Vote on Plan

July 7 (Bloomberg) -- USEC Inc., a producer of enriched uranium for nuclear power plants that was sold by the U.S. government in 1998, won bankruptcy court approval to seek creditor votes on a plan to hand control to noteholders.

U.S. Bankruptcy Judge Christopher Sontchi today approved the disclosure statement explaining the recovery plan, calling the outline “very thorough, well done and precise.” No objections were filed, D.J. Baker, an attorney for USEC, told the judge at a hearing in Wilmington, Delaware.

The proposed restructuring is supported by holders of about 65 percent of USEC’s debt and preferred shareholders Toshiba Corp. and Babcock & Wilcox Co., USEC said. The convertible notes and all of USEC’s preferred and common shares would be swapped for $240.4 million in new debt and new common stock, according to the disclosure statement.

Noteholders would receive $200 million of the new debt and 79 percent of the new equity. Toshiba and Babcock & Wilcox would each get $20.2 million of the new debt and about 8 percent of the new stock. The noteholders will have a recovery of 39 percent and the preferred shareholders 35 percent from the new debt, USEC said, adding that the new stock is too speculative to be valued.

Existing Shareholders

Existing shareholders would get 5 percent of USEC’s new shares under the plan. Goldman Sachs Group Inc. is USEC’s biggest holder of common stock with about 5.31 percent, followed by Tradewinds Global Investors LLC with 3.7 percent and Global X Management Co. with 3.61 percent, according to data compiled by Bloomberg.

USEC fell 19 percent to $5.95 at 12:36 p.m. in New York trading. The shares closed at a 52-week high of $29.12 on July 29.

USEC, based in Bethesda, Maryland, from 1994 until 2013 bought nuclear material from Russia, helping to convert the equivalent of 20,000 nuclear warheads under the “Megatons to Megawatts” nonproliferation program, according to court papers.

A new contract to obtain Russian material runs through 2022. USEC and Russia’s Techsnabexport OAO also agreed to study the feasibility of setting up a U.S. enrichment plant that would employ Russian centrifuge technology, according to the disclosure statement.

In the meantime, USEC said it plans to build a multibillion-dollar plant in Ohio, replacing one in Kentucky, if Department of Energy funding becomes available.

USEC listed assets of $70 million and debt of $1.07 billion in Chapter 11 papers filed on March 5. The company blamed an oversupply of nuclear fuel for the filing. USEC said in December that it would file bankruptcy to replace $530 million in senior convertible notes coming due in October.

The case is In re USEC Inc., 14-bk-10475, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporters on this story: Dawn McCarty in Wilmington at dmccarty@bloomberg.net; Phil Milford in Wilmington, Delaware at pmilford@bloomberg.net

To contact the editors responsible for this story: Andrew Dunn at adunn8@bloomberg.net Stephen Farr

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