(Adds background; updates shares)
Dec 16 USEC Inc, a supplier of enriched uranium for commercial nuclear power plants, said it expected to file for bankruptcy protection as part of a deal with its bondholders, sending the company's shares down as much as 52 percent.
USEC, which has been struggling to fund projects and has posted losses for the past four quarters, said it expected to file a prearranged Chapter 11 petition in the first quarter.
The company said it had reached an agreement with a majority of its bondholders to replace about $530 million in convertible notes, scheduled to mature in October 2014, with new debt and equity.
USEC, which had a market value of about $43 million as of Friday's close, also said it was in talks with strategic investors Toshiba Corp and Babcock & Wilcox Investment Co to restructure their holdings.
Babcock & Wilcox Investment is a unit of power generation systems maker Babcock & Wilcox Co.
USEC had total debt of $640.4 million and cash and equivalents of $128.4 million as of Sept. 30, according to Thomson Reuters data.
The company said in November that government funding for its $350 million American Centrifuge Project in Ohio would end in January.
The project, which is 80 percent funded by the U.S. Department of Energy (DOE), is designed to produce low-enriched uranium used to make nuclear fuel. It was scheduled to be completed this month.
USEC wound down operations at another uranium enrichment plant earlier this year. The company is in the process of handing over the plant in Paducah, Kentucky to owner DOE.
Although power companies are building five reactors in southeastern United States, nuclear power generation is expected to decline. This will lower demand for uranium, unless there are new regulations limiting carbon emissions or there is a spike in natural gas prices.
Moreover, uranium prices are yet to recover after they plummeted following the March 2011 meltdown at Japan's Fukushima Daiichi atomic power plant.
USEC said on Monday it did not expect any of its subsidiaries to file for bankruptcy.
The company said it expected to file its Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware.
USEC shares were down 51 percent at $4.29 in early trading on Monday. (Reporting by Swetha Gopinath in Bangalore; Editing by Kirti Pandey)