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USEC Surges On Bankruptcy News, Common Holders Assumed To Reject Plan

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USEC (NYSE: USU) shares surged as much as 30 percent Tuesday, a day after a bankruptcy court judge cleared the company to solicit creditor approval of its reorganization plan.

The supplier of power plant uranium said it expects a hearing on court approval of the reorganization September 5.

Under the plan supported by a 66 percent majority of creditors, USEC would replace its current common stock with new shares. Current common holders would receive five percent of the new stock with the remainder going to secured stakeholders.

Common shareholders "are assumed to have rejected" the reorganization and their approval won't be solicited, the company said.

USEC also envisions swapping debt of $530 million with new debt of $240.4 million.

USEC has proven volatile recently. Last week shares rose sharply on news that the Department of Energy would kick in $2.5 million to fund its American Centrifuge project. Total capital need for the project is a reported $4 billion.

About 20 percent of USEC's 4.95 million shares outstanding are held as short interest.

USEC traded recently at $7.05, up more than 16 percent.

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