By Frank Lewis
July 30, 2013
PDT Staff Writer
Shares of USEC Inc (USU.N) were up 18 percent in premarket trading Monday, extending a meteoric rise that has quadrupled the market value of the company. According to USEC officials, they struck a deal with the U.S. Department of Energy under which the government unit will raise the level of funding it provides to the research, development and demonstration (RD&D) program for the American Centrifuge Project at Piketon.
Shares were selling at $22.69 after dropping 14 percent in the past 12 months. The cooperative agreement provides funding for a cost-share RD&D program for the ACP to enhance the technical and financial readiness of the centrifuge technology for commercialization.
Paul Jacobson, Vice President of Communications for USEC, said the company cannot link a recent amendment with DOE to the soaring stock price, and would not attempt to do so.
“The RD&D program has been funded on an incremental basis,” Jacobson said. “And we simply signed an amendment with the Department of Energy to have the next incremental funding transferred over so we could continue with the program through the end of September, the end of the current federal fiscal year. So we have essentially gotten the next batch of money to keep the program going.”
The agreement is that the DOE will pay 80 percent of the cost of the project, and USEC is responsible for 20 percent. USEC said, under the newly amended terms, the DOE’s total contribution would be up to $280 million, and USEC’s contribution would be $70 million. The previous agreement provided DOE funding of $197.8 million, and the amended agreement increases the obligated DOE funding to $227.7 million, and allowable costs for the RD&D program to $284.6 million through Sept. 30. USEC’s portion of allowable costs would be $56.9 million through the same time frame.
Jacobson elaborated on the amendment.
“We included in that some general updates about the fact that all 120 machines of the cascade are now running at speed,” Jacobson said. “We’re moving forward with testing and conditioning so that we can be operating a full 120 machine cascade in the fourth quarter.”
Jacobson again said he would not attempt to link stock prices with the amendment.
“We are, however, extremely encouraged by the great progress the RD&D program has made,” Jacobson said. “It has been hitting all of its milestones ahead of schedule. It has been within budget or under budget, in some cases, and on schedule or ahead of schedule, and continues to move forward with success in demonstrating the viability of the technology.”
Jacobson added quickly a reminder that USEC had announced at its annual meeting of stockholders that the stockholders had approved a reverse stock split as a means to increase the per share price of their common stock and enable USEC to regain compliance with New York Stock Exchange continued listing requirements regarding $1 minimum share price. At that time, as a result of the reverse stock split, the number of issued and outstanding shares of common stock would be reduced from approximately 124 million to approximately 5 million.
Frank Lewis may be reached at 740-353-3101, ext. 252, or at firstname.lastname@example.org. For breaking news, follow Frank on Twitter @FrankLewisPDT.