USEC Judge Questions Company’s Need for ‘Life Support’Phil Milford and Dawn McCarty
USEC Inc., which uses scrapped atomic weapons to make enriched uranium for nuclear power plants, was challenged by a bankruptcy judge over its attempt to reorganize as demand for the fuel slumps.
The Bethesda, Maryland-based company, which buys some of its uranium under contract from Russia, yesterday sought Chapter 11 protection from creditors, listing $70 million in assets and $1.07 billion in debt.
U.S. Bankruptcy Judge Christopher Sontchi said today that USEC has no financial projections and falling sales because of an oversupply of enriched uranium, raising the question of why it would bother to reorganize its balance sheet in bankruptcy.
“What’s the point?” Sontchi asked D.J. Baker, a lawyer for USEC, at a hearing in Wilmington, Delaware. A reorganization might only “keep the company on life support for the next six to 10 years,” Sontchi said.
The explanation is “a very difficult thing to go into,” Baker said, adding that it might generate “adverse commentary” similar to that surrounding another bankrupt government-supported company, solar-panel maker Solyndra LLC.
“USEC is now as bankrupt as the reasons for DOE’s questionable handouts to this troubled company,” Senator Edward Markey, a Massachusetts Democrat, said yesterday in an e-mailed statement. “It’s now clear that USEC’s junk bond status and junk technology have finally found their way to the financial junk heap.”
Baker said he will provide further details on why USEC should continue to build a $3 billion, state-of-the-art uranium processor in future hearings.
The American Centrifuge project, described on the company’s website as a plan to develop a new commercial technology for enriching uranium, is on schedule and under budget, according to a Nov. 4 company release. The Energy Department is covering 80 percent of the cost and USEC the remainder under a June 2012 agreement. In October, USEC said the U.S. was providing $13.6 million more for the project, bringing total government funding to $241.3 million.
The glut of nuclear fuel resulted from a tsunami that damaged Japan’s Fukushima reactors in 2011 and led to reactor shutdowns in Japan and Germany, USEC said in court papers.
USEC fell 8 percent to $4.04 in New York trading. They plunged 21 percent yesterday.
The case is In re USEC Inc., 14-bk-10475, U.S. Bankruptcy Court, District of Delaware (Wilmington).