Five months ago, we highlighted yet another in the inglorious roll of momentum-ignited stop-blasting manipulations of the US "stock market". In most cases, the furore dies down after a day or two as the algos find fresh meat… but in the case of USEC, it would appear the "berserker" algo we highlighted merely removed every willing buyer (i.e. forced short-cover-er) and was exhibiting the death throes of yet another micro-cap as the company has announced it is entering a pre-pack Chapter 11 bankruptcy – with existing stockholders receiving 5% of the new common stock.
…"We are pleased to reach agreement with a significant number of our noteholders on a plan to improve our capital structure…"
Discussions continue with the Babcock & Wilcox Investment Company (B&W) and Toshiba Corporation regarding agreement to restructure their preferred convertible equity investment. The noteholders and USEC have made a proposal regarding restructuring the Toshiba and B&W investment and the parties are in discussions on those terms and documentation which must be completed prior to implementing the financial restructuring plan. As strategic investors, Toshiba and B&W remain supportive on deployment of the American Centrifuge Plant.
The agreement with the noteholders, which includes the participation of financial institutions representing approximately 60 percent of the company’s debt, calls for the company’s $530 million debt to be replaced with a new debt issue totaling $200 million. The new debt issue would mature in five years and automatically extend an additional five years upon the occurrence of certain events. In addition, the restructuring plan contemplates that the existing equity will be replaced with new equity. The noteholders would receive 79 percent of the new equity as common stock. The plan calls for Toshiba and B&W to jointly obtain 16 percent of the new common stock, as well as $40 million in debt on the same terms as the noteholders, in exchange for their existing preferred equity investment. Existing stockholders would receive 5 percent of the new common stock. As noted above, the detailed terms for restructuring Toshiba and B&W’s preferred equity investment are being negotiated. Once implemented, the new capital structure will increase USEC’s financial flexibility and support the company’s continuing sponsorship of the American Centrifuge project.
In order to implement the terms of the agreement, USEC Inc. 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. United States Enrichment Corporation is anticipated to be a plan proponent for a limited purpose, but will not be included in the Chapter 11 filing. Such a filing is not expected to have any effect on on-going operations, suppliers, deliveries to customers or the American Centrifuge research, development and demonstration program.
The restructuring plan support agreement and related materials can be found in an 8-K publicly filed today with the Securities and Exchange Commission, and is available in the Investors section of the company website, www.usec.com.
On the bright side, this is how the world is supposed to work… failing companies "fail", are restructured, and enabled to re-grow… but zombified by ever-rolling debts, subsidies, and tax dodges… The stock is down 60% in the pre-open (back at "berserker" low levels)
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/YxVY8e-4nvs/story01.htm Tyler Durden