May 15 (The following statement was released by the rating agen
-- 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.
On May 15, 2012, Standard & Poor's Ratings Services placed its ratings on USEC
Inc., including its 'CCC+' corporate credit rating, on CreditWatch with
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.
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 Affirmed; Placed On CreditWatch
Corporate Credit Rating CCC+/Watch Neg/-- CCC+/Developing/--
Senior Unsecured CCC-/Watch Neg CCC-
Recovery Rating 6 6