Toshiba, Babcock & Wilcox to invest $200 million in uranium producer USEC

Electronics and nuclear power giant Toshiba Corporation and US energy contractor Babcock & Wilcox Company have yesterday agreed to invest $100 million each in New York-listed United States Enrichment Corporation (USEC) to fund the development of its next-generation uranium enrichment centrifuge plant in Ohio.

Tokyo-based Toshiba and Babcock & Wilcox Investment Company, an affiliate of Babcock & Wilcox Company (B&W) of Lynchburg, Virginia will invest $100 million each in USEC in three stages to fund the development of USEC's American Centrifuge Plant in Ohio.

The investment comes after the Maryland-based USEC, which repored 2009 revenues of $2.36 billion, supplies more than half of the US market with enriched uranium for power generation, had missed a US government a $2-billion loan guarantee for its American Centrifuge Plant.

''This is a historic day for USEC. This agreement will strengthen USEC as a global energy leader that delivers nuclear fuel and related services on a reliable, competitive basis. In addition, the strategic relationship between our companies will create new business opportunities across the entire nuclear fuel cycle,'' said John Welch, USEC president and CEO.

''In preparation for updating our Department of Energy loan guarantee application to finance the American Centrifuge, we have worked hard to successfully demonstrate the American Centrifuge uranium enrichment technology and, as indicated by today's announcement, to improve the financial foundation for the project and the company,'' he added.

Under the terms of the agreement, Toshiba and B&W will each invest $100 million in USEC, spread out over three phases, and in return, they would receive convertible preferred stock as well as warrants to purchase shares of common stock, which would be exercisable in the future.