USEC Inc. (NYSE: USU) has just announced that it is requesting that the Obama administration “review further the economic recovery and national and energy security benefits of providing a loan guarantee for the American Centrifuge Plant.” This announcement is of little surprise. Yesterday’s news severely changed how Wall Street and Main Street will look at the role of nuclear power as an alternative to foreign energy.
The company has said that the project meets the financial and technical requirements of the DOE’s Loan Guarantee Program, and numerous Obama administration policy objective. USEC now plans to pursue further discussions with DOE to address technical and financial concerns it may have.
As a result of the decision, USEC been forced to begin the process of demobilizing the project and initiating layoffs that will directly affect nearly 2,000 current USEC and contractor employees in Ohio and several other states. The company also noted that this will indirectly impact thousands more.
USEC again noted that it offered to provide a $1 billion parent guarantee that would be fully collateralized by non-project, corporate assets to allow the Department to fund this project on a fully protected basis and to avoid demobilization. USEC would continue to address any remaining technical and financial issues over the next 9 to 12 months.
Further, the company said that this offer is still on the table. The company disagrees with the DOE’s characterization that the project’s technology is not ready to move to commercial operations. It went on to say that its customers have expressed confidence in the technology and have already committed to purchasing over half of the initial planned output of the American Centrifuge Plant.
This is also characterized by the company as America’s “only commercial uranium enrichment facility using U.S.-owned and operated centrifuge technology…”
Frankly, this appeal and outreach is of no surprise. In fact, the company has a fiduciary responsibility to do this. The company should probably be enlisting groups of people to get a few million signatures on petitions sent to all members of the House and all Senate. That would probably command some extra attention. There is a fairly large pool of unemployed workers that the company can hire on the cheap to go round up signatures for support of the project in Ohio and nationally.
The company also needs to get the Pickens Plan people behind it.
Lastly, USEC should consider using a media blitz with those Congressmen and Senators who are in favor of the bill. That would put some added pressure on the administration and on the DOE to reconsider its decision. The focus should be on “getting off foreign energy” rather than on the jobs. There is already almost a 10% unemployment rate, and some put the “shadow unemployment” or unofficial unemployment rate at 16% when you consider the discouraged, those who have exhausted their benefits, and those who are either underemployed or who take part-time contract work.
USEC shares are still down 6% at $3.80 on the day, again on an exponential volume surge.
JON C. OGG
JULY 29, 2009
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