B&W Completes First Phase of $100 Million Strategic Investment in USEC

Friday, Sep 03, 2010

The Babcock & Wilcox Company (B&W) (NYSE:BWC), through its affiliate Babcock & Wilcox Investment Company, announced today that it has made a $37.5 million investment in USEC Inc. (NYSE: USU). This is the first phase of its previously announced definitive agreement to make a $100 million strategic investment in USEC. In connection with the investment, Michael S. Taff, Senior Vice President and Chief Financial Officer of B&W, has been elected to USEC’s Board of Directors.

“The completion of the first phase of this investment demonstrates B&W’s continued commitment to broadening its nuclear energy technology and service portfolio”

In May 2010, USEC announced that Toshiba Corporation and Babcock & Wilcox Investment Company signed a definitive agreement to make a strategic investment totaling $200 million in USEC over three phases.

The investment also initiates the formation of American Centrifuge Manufacturing (ACM), a joint venture between B&W and USEC. ACM will provide integrated manufacturing and assembly of centrifuge machines for USEC’s American Centrifuge Plant.

“The completion of the first phase of this investment demonstrates B&W’s continued commitment to broadening its nuclear energy technology and service portfolio,” said Brandon Bethards, President and Chief Executive Officer of B&W. “In addition, we consider this investment as an opportunity to allow us to enhance our international business relationship with Toshiba, a strong nuclear products and services provider. As a leader in the nuclear power industry, we are pleased to participate in an innovative energy project like the American Centrifuge Plant, which will supply the nuclear industry with a reliable fuel supply for decades to come.”

The second phase of the strategic investment, which will be $25 million, will occur when, among other things, USEC secures a conditional commitment on a $2 billion loan guarantee from the U.S. Department of Energy (DOE). The balance of the investment, which will be $37.5 million, is conditioned, among other things, on closing the loan under DOE’s loan guarantee program for the American Centrifuge Plant and USEC shareholder approval of certain matters.

The American Centrifuge Project is based on the use of highly efficient centrifuges to produce uranium fuel utilizing skilled workers primarily in Tennessee and Ohio.

ACM is headquartered at USEC’s American Centrifuge Technology & Manufacturing Center in Oak Ridge, Tenn., which has been operated by Babcock & Wilcox Technical Services Clinch River, LLC to manufacture components for USEC since 2007. ACM will manage all aspects of manufacturing USEC’s AC100 series centrifuge machines, including the integration of all suppliers and subcontractors, as well as delivery and assembly of production unit centrifuges at the American Centrifuge Plant in Piketon, Ohio. The joint venture expects to provide spare parts and other maintenance support services for centrifuge machines at the American Centrifuge Plant under a long-term service agreement.

Source: Business Wire