USEC to File for Chapter 11 as Part of Debt-Restructuring

USEC Inc., the uranium-enrichment company that was sold by the U.S. government 15 years ago, agreed to replace $530 million of convertible debt and will file for Chapter 11 bankruptcy protection in the first quarter.

USEC plans to replace the convertible notes scheduled to mature in October 2014 with $200 million in new debt, the Bethesda, Maryland-based company said in a statement today. The anticipated filing in U.S. Bankruptcy Court in Delaware won’t affect operations or customer deliveries, it said.

Under the restructuring, bondholders will get 79 percent of the new equity that will replace the existing equity. Preferred-equity holders Toshiba Corp. and Babcock & Wilcox Investment Co. stand to receive 16 percent of the new stock and $40 million of debt. Existing shareholders will get 5 percent of the new stock.

USEC’s $530 million of 3 percent convertible notes maturing in October traded at 33.5 cents on the dollar at 4:09 p.m. in New York, up from 20 cents on Nov. 19, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. USEC shares plunged 60 percent to $3.51 at the close.

The company is building the American Centrifuge plant in Ohio, which is intended to replace a plant in Kentucky.

USEC’s legal adviser for the restructuring is Latham & Watkins LLP, its financial adviser is Lazard Ltd. and its restructuring adviser is AlixPartners LLP. A group of USEC convertible-note holders was advised by Akin Gump Strauss Hauer & Feld LLP and Houlihan Lokey.

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