Centrus Energy Corp. (the “Company”) (NYSE MKT: LEU)
announced today that it has commenced a private exchange offer (the
“Exchange Offer”) to exchange any and all of the Company’s
8.0% PIK toggle notes due 2019/2024 (the “Outstanding
Notes”) for up to (i) $85 million 8.25% senior secured notes
due 2027 (the “New Notes”), (ii) $120 million 7.5%
cumulative redeemable preferred stock (the “Preferred
Stock”) and (iii) $30 million in cash.
The New Notes will rank equally in right of payment with all of
the Company’s existing and future unsubordinated indebtedness other
than the Company’s “Issuer Senior Debt” and “Limited Secured
Acquisition Debt”. The New Notes will rank senior in right of
payment to all of the Company’s existing and future subordinated
indebtedness. The New Notes will be guaranteed on a subordinated
and limited basis (the “Guarantee”) by the Company’s
subsidiary, United States Enrichment Corporation (the
“Guarantor”). The terms and conditions of the New Notes will
be substantially similar to those of the Outstanding Notes after
giving effect to the proposed amendments pursuant to the Consent
Solicitation discussed below, except in terms of interest and
maturity. In addition, the indenture governing the New Notes (the
“New Notes Indenture”) will not include termination
provisions with respect to the Guarantee that exist in the
indenture governing the Outstanding Notes (the “Original
Indenture”) and will include restrictions on certain transfers
of cash to acquire equity interests.
The following table sets forth the Outstanding Notes subject to
the Exchange Offer, the exchange consideration payable for
Outstanding Notes tendered after the Early Tender Date and on or
prior to the Expiration Date and not withdrawn, the early tender
premium, and the total exchange consideration payable for
Outstanding Notes tendered on or prior to the Early Tender Date (as
defined below) and not withdrawn, which includes the early tender
premium.
Outstanding Notes to be
Exchanged
CUSIP
Principal Amount Outstanding as of
January 5, 2017
Exchange
Consideration(1)(2)
Early Tender Premium(1)
Total Exchange
Consideration(1)(2)(3)
8.0% PIK Toggle Notes due 2019/2024 15643UAA2 $234,574,504
$362.36 of New Notes plus $509.75 of Preferred Stock plus a cash
payment of $127.89 A cash payment of $7.50 $362.36 of New Notes
plus $509.75 of Preferred Stock plus a cash payment of $135.39
___________________
(1) Per $1,000 principal amount of Outstanding Notes
tendered. (2) Preferred Stock amounts reflect aggregate liquidation
preference at issuance. (3) Includes early tender premium.
Holders tendering Outstanding Notes after 5:00 p.m., New York
City time, on January 19, 2017 (as such date may be extended, the
“Early Tender Date”) will not be eligible to receive the
early tender premium of $7.50 cash included in the total exchange
consideration offered in the Exchange Offer. The expiration date
for the Exchange Offer is 11:59 p.m., New York City time, on
February 2, 2017 unless extended (the “Expiration Date”).
The Exchange Offer is being made upon the terms and subject to the
conditions set forth in the confidential exchange offer memorandum
dated January 5, 2017 (the “Exchange Offer Memorandum”).
The Exchange Offer is conditioned upon the receipt of valid
tenders of Outstanding Notes, not withdrawn, of at least $211.12
million aggregate principal amount of Outstanding Notes on or
before the Expiration Date (the “Minimum Participation
Condition”) and certain other conditions, including that the
issuance of the Preferred Stock will not result in an “ownership
change” for purposes of Section 382 of the Internal Revenue Code of
1986, as amended.
In support of the Exchange Offer, on January 5, 2017, the
Company entered into Support Agreements with certain holders of the
Company’s Outstanding Notes, including class B common shareholders
Toshiba America Nuclear Energy Corporation and BWX Technologies,
Inc. (collectively, the “Support Parties”), whereby the
Support Parties agreed to participate in the Exchange Offer and
tender all of their Outstanding Notes, subject to certain
conditions. Together, the Support Parties hold an aggregate
principal amount of $102.4 million of the Outstanding Notes, which
makes up approximately 43.6% of the Outstanding Notes.
Further, in connection with the Exchange Offer, the Company is
also soliciting consents (the “Consent Solicitation”) to
implement certain proposed amendments to the Original Indenture,
including, among other things, to (a) amend the existing exception
for transfer of cash to permit the transfer of cash and cash
equivalents by the Guarantor for any purpose not otherwise
prohibited by the Original Indenture or from the proceeds from or
otherwise relating to a “Designated Senior Claim”, “Issuer Senior
Debt” or “Limited Secured Acquisition Debt”, (b) expand the
definition of “Credit Facility” to facilitate the Company’s
flexibility to incur senior debt, (c) permit the transfer or
contribution of assets other than cash or cash equivalents to joint
venture entities or partners for fair value, (d) exempt asset
transfers permitted under the Original Indenture from the
definition of “Change of Control”, (e) conform the definition of
“Issuer Senior Debt”, “Designated Senior Claims”, “Collateral” and
“Security Documents” to the definitions in the New Notes Indenture,
(f) make the lien securing the “Guarantee” of the Outstanding Notes
rank pari passu with the lien securing the Guarantee of the New
Notes pursuant to a pari passu intercreditor agreement, (g) provide
that the Outstanding Notes will be senior in right of payment to
“Limited Secured Acquisition Debt” (except with respect to proceeds
of the “Collateral” securing such “Limited Secured Acquisition
Debt”, which shall be governed by the “Limited Secured Acquisition
Indebtedness Intercreditor Agreement” and as to which the “Limited
Secured Acquisition Debt” is not subordinated in right of payment),
(h) specify a form of intercreditor agreement pursuant to which
liens securing the Outstanding Notes will be subordinated to liens
securing “Limited Secured Acquisition Debt” in the same manner as
is the case with “Designated Senior Claims”, with respect to the
applicable “Collateral”, (i) specify a form of intercreditor
agreement pursuant to which the New Notes and the Outstanding Notes
will rank senior in right of payment and the liens securing the New
Notes and the Outstanding Notes will rank senior to any “Finance
Debt” of any new subsidiary (subject to certain exceptions)
acquired with cash of the “Issuer” and (j) update the form of
junior lien intercreditor agreement annexed to the Original
Indenture with the form annexed to the New Notes Indenture (the
“Proposed Amendments”). Holders may not consent to the
Proposed Amendments without tendering their Outstanding Notes and
they may not tender their Outstanding Notes without consenting to
the Proposed Amendments.
The Exchange Offer and Consent Solicitation are subject to the
receipt of valid consents to the Proposed Amendments from the
holders of a majority of the outstanding principal amount of the
Outstanding Notes (the “Requisite Consents”). If the Company
receives the Requisite Consents and the other conditions to the
Exchange Offer are satisfied or waived, the Company will execute a
supplemental indenture making the Proposed Amendments to the
Original Indenture on or soon after the Expiration Date, but not
later than the date the Exchange Offer is consummated. The
supplemental indenture, by its terms, will become effective only
upon the consummation of the Exchange Offer.
The Company has the right to amend, terminate or withdraw the
Exchange Offer and Consent Solicitation, at any time and for any
reason, including if any of the conditions to the Exchange Offer
and Consent Solicitation are not satisfied.
* * *
The New Notes, the Guarantee and the Preferred Stock will not be
registered under the Securities Act of 1933, as amended (the
“Securities Act”), and may not be transferred or sold in the
United States absent registration or an applicable exemption from
the registration requirements of the Securities Act. The Exchange
Offer is being made only to qualified institutional buyers,
accredited investors and, outside the United States, to persons
other than U.S. persons. The Exchange Offer is made only by, and
pursuant to, the terms set forth in the Exchange Offer Memorandum,
and the information in this press release is qualified by reference
to the Exchange Offer Memorandum.
This press release shall not constitute a solicitation of
consents, an offer to sell or the solicitation of an offer to buy
any security and shall not constitute an offer, solicitation or
sale in any jurisdiction in which such offering, solicitation or
sale would be unlawful. No recommendation is made as to whether
holders of the Outstanding Notes should tender their securities or
give their consent.
D.F. King (the “Exchange Agent”) is acting as the
Exchange Agent for the Exchange Offer and Consent Solicitation.
Requests for the Exchange Offer Memorandum and any supplements
thereto may be directed to the Exchange Agent at (212) 269-5550
(for brokers and banks) or (800) 848-3409 (for all others).
Forward Looking Statements
This news release contains “forward-looking statements” within
the meaning of Section 21E of the Securities Exchange Act of 1934 -
that is, statements related to future events. In this context,
forward-looking statements may address our expected future business
and financial performance, and often contain words such as
“expects”, “anticipates”, “intends”, “plans”, “believes”, “will”,
“should”, “could”, “would” or “may” and other words of similar
meaning. Forward-looking statements by their nature address matters
that are, to different degrees, uncertain. For Centrus Energy
Corp., particular risks and uncertainties that could cause our
actual future results to differ materially from those expressed in
our forward-looking statements include, risks and uncertainties
related to the limited trading markets in our securities; risks
related to our ability to maintain the listing of our common stock
on the NYSE MKT LLC; the continued impact of the March 2011
earthquake and tsunami in Japan on the nuclear industry and on our
business, results of operations and prospects; the impact and
potential extended duration of the current supply/demand imbalance
in the market for low-enriched uranium (“LEU”); risks related to
actions that may be taken by the U.S. government, the Russian
government or other governments that could affect our ability or
the ability of our sources of supply to perform under contract
obligations, including the imposition of sanctions, restrictions or
other requirements; the impact of government regulation including
by the U.S. Department of Energy and the U.S. Nuclear Regulatory
Commission; the outcome of legal proceedings and other
contingencies (including lawsuits and government investigations or
audits); risks relating to our sales order book, including
uncertainty concerning customer actions under current contracts and
in future contracting due to market conditions and lack of current
production capability; risks associated with our reliance on
third-party suppliers to provide essential products or services to
us; pricing trends and demand in the uranium and enrichment markets
and their impact on our profitability; uncertainty regarding our
ability to commercially deploy competitive enrichment technology;
risks and uncertainties regarding funding for the American
Centrifuge project and our ability to perform under our agreement
with UT-Battelle, LLC, the management and operating contractor for
Oak Ridge National Laboratory, for continued research and
development of the American Centrifuge technology; the competitive
environment for our products and services; the potential for
further demobilization or termination of the American Centrifuge
project; risks related to the current demobilization of the
portions of the American Centrifuge project including risks that
the schedule could be delayed and costs could be higher than
expected; the timing, savings and execution of any potential
restructurings; potential strategic transactions, which could be
difficult to implement, disrupt our business or change our business
profile significantly; changes in the nuclear energy industry; the
impact of financial market conditions on our business, liquidity,
prospects, pension assets and insurance facilities; revenue and
operating results can fluctuate significantly from quarter to
quarter, and in some cases, year to year; and other risks and
uncertainties discussed in this and our other filings with the
Securities and Exchange Commission, including our Annual Report on
Form 10-K for the fiscal year ended December 31, 2015 and
subsequent Quarterly Reports on Form 10-Q, which are available on
our website at www.centrusenergy.com. We do not undertake to update
our forward-looking statements except as required by law.
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version on businesswire.com: http://www.businesswire.com/news/home/20170105005909/en/
Centrus Energy Corp.Don Hatcher (301) 564-3460
Centrus Energy (AMEX:LEU)
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