S&P places USEC Inc. 'CCC+' rating on watch neg

Tue May 15, 2012 5:45pm EDT

May 15 (Reuters) - (The following statement was released by the rating agen	
	
Overview	
     -- There is continued uncertainty to whether USEC Inc. can secure funding 	
for a research, development, and demonstration program in lieu of a 	
conditional commitment for a loan guarantee. 	
     -- In addition, we consider the company's liquidity position to be weak. 	
     -- We placed the ratings on USEC, including the 'CCC+' corporate credit 	
rating, on CreditWatch with negative implications.	
     -- We will meet with the management of USEC to review financial and 	
strategic objectives to resolve the CreditWatch.	
	
	
Rating Action	
On May 15, 2012, Standard & Poor's Ratings Services placed its ratings on USEC 	
Inc., including its 'CCC+' corporate credit rating, on CreditWatch with 	
negative implications.	
	
Rationale	
The CreditWatch listing reflects our assessment that because of a delay and 	
uncertainty surrounding the approval of the company's Department of Energy's 	
(DOE) loan guarantee application to fund a new, more cost effective 	
technology, USEC and the DOE are negotiating a cost share research, 	
development, and demonstration (RD&D) program. If USEC is unable to secure 	
funding for the RD&D program before May 31, 2012, it would expect to begin 	
demobilizing the project. The company has publicly stated that it may pursue 	
discussions with creditors and key stakeholders regarding the restructuring of 	
its business and its capital structure.	
	
The rating on Bethesda, Md.-based USEC Inc. reflects the combination of what 	
Standard & Poor's considers to be USEC's "highly leveraged" financial risk 	
profile and "vulnerable" business risk profile. These assessments incorporate 	
the challenges that the company faces from an intensely competitive market for 	
uranium enrichment; the uncertainty regarding the success of financing its 	
proposed new cost-efficient technology; limited operating diversity, given 	
that half of its supply comes from its single-site uranium enrichment 	
operating facility; and high debt levels. Still, USEC benefits from its 	
position as the U.S. government's executive agent for the Megatons to 	
Megawatts program, a 20-year $8 billion commercially funded nuclear 	
nonproliferation initiative of the U.S. and Russian governments.	
	
CreditWatch	
In resolving the CreditWatch listing, we will meet with the company and assess 	
its competitive market position, its ability to move forward with the project 	
without a DOE guarantee, and its current operating and liquidity situation. In 	
addition, we will also discuss with management its short- and 	
intermediate-term business and financial strategies.	
	
Related Criteria And Research	
     -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, 	
May 27, 2009	
     -- Our Rating Process, April 15, 2008	
	
	
Ratings List	
Ratings Affirmed; Placed On CreditWatch	
                                        To                 From	
USEC Inc.	
 Corporate Credit Rating                CCC+/Watch Neg/--  CCC+/Developing/--	
 Senior Unsecured                       CCC-/Watch Neg     CCC-	
  Recovery Rating                       6                  6
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