Moody's Downgrades USEC (USU) to 'Ca'; Outlook Negative
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Moody's Investors Service lowered USEC's (NYSE: USU) Corporate Family Rating (CFR) to Ca from Caa1 and Probability of Default Rating to C-PD from Caa1-PD. Moody's also downgraded the company's senior unsecured ratings to Ca from Caa2. The downgrades were prompted by the company's December 16, 2013 announcement that it has initiated a debt restructuring plan and expects to file for relief under Chapter 11 of the United States Bankruptcy Code in the first quarter of 2014. The outlook is negative.
We intend to withdraw all ratings following company's Chapter 11 filing.
RATINGS RATIONALE
The downgrade follows today's announcement that USEC has initiated a debt restructuring plan and intends to file for reorganization under Chapter 11 of the Bankruptcy Code.
On December 16, 2013, the company announced that it reached agreement with its noteholders, representing approximately 60 percent of the company's debt, to replace the company's existing debt with new debt and equity. The plan calls for the company's $530 million debt, maturing in October 2014, to be replaced with a new debt issue totaling $200 million and maturing in five years or longer. The noteholders would also receive common stock representing 79% of the company's equity. The execution of the plan is contingent on reaching agreement with the company's preferred equity investors Babcock & Wilcox Investment Company (B&W) and Toshiba Corporation, as well as the continued support of the Department of Energy (DOE) for the American Centrifuge project. In order to implement the terms of the agreement, USEC expects to file a prearranged and voluntary Chapter 11 petition for relief in the United States Bankruptcy Court for the District of Delaware in the first quarter of 2014. It is anticipated that none of the company's subsidiaries will be filing for relief.
Subsequent to the company's Chapter 11 filing, Moody's will withdraw the ratings. Please refer to Moody's Withdrawal Policy on moodys.com
The principal methodology used in this rating was the Global Steel Industry Methodology published in October 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.
We intend to withdraw all ratings following company's Chapter 11 filing.
RATINGS RATIONALE
The downgrade follows today's announcement that USEC has initiated a debt restructuring plan and intends to file for reorganization under Chapter 11 of the Bankruptcy Code.
On December 16, 2013, the company announced that it reached agreement with its noteholders, representing approximately 60 percent of the company's debt, to replace the company's existing debt with new debt and equity. The plan calls for the company's $530 million debt, maturing in October 2014, to be replaced with a new debt issue totaling $200 million and maturing in five years or longer. The noteholders would also receive common stock representing 79% of the company's equity. The execution of the plan is contingent on reaching agreement with the company's preferred equity investors Babcock & Wilcox Investment Company (B&W) and Toshiba Corporation, as well as the continued support of the Department of Energy (DOE) for the American Centrifuge project. In order to implement the terms of the agreement, USEC expects to file a prearranged and voluntary Chapter 11 petition for relief in the United States Bankruptcy Court for the District of Delaware in the first quarter of 2014. It is anticipated that none of the company's subsidiaries will be filing for relief.
Subsequent to the company's Chapter 11 filing, Moody's will withdraw the ratings. Please refer to Moody's Withdrawal Policy on moodys.com
The principal methodology used in this rating was the Global Steel Industry Methodology published in October 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.
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