BETHESDA, Md. ,
Nov. 5,
2024 /PRNewswire/ -- Centrus Energy Corp. (NYSE
American: LEU) ("Centrus") today announced the pricing of
$350 million aggregate principal
amount of 2.25% Convertible Senior Notes due 2030 (the "Notes") in
a private offering (the "Offering") to persons reasonably believed
to be qualified institutional buyers pursuant to Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act"). In
connection with the Offering, Centrus has granted the initial
purchasers of the Notes an option to purchase, for settlement
within the 13-day period beginning on, and including, the date on
which the Notes are first issued, up to an additional $52.5 million aggregate principal amount of the
Notes on the same terms and conditions. The sale of the Notes to
the initial purchasers is expected to settle on November 7, 2024, subject to customary closing
conditions.
The Notes will bear interest at a rate of 2.25% per year,
payable semiannually in arrears on May
1 and November 1 of each year,
beginning on May 1, 2025. The Notes
will mature on November 1, 2030,
unless earlier repurchased, redeemed or converted in accordance
with their terms prior to such date.
The conversion rate for the Notes will initially be 10.2564
shares of Class A common stock of Centrus, per $1,000 principal amount of Notes (equivalent to
an initial conversion price of approximately $97.50 per share of Class A common stock of
Centrus, which represents a conversion premium of approximately 25%
to the last reported sale price of the Class A common stock of
Centrus on The NYSE American LLC on November
4, 2024). The conversion rate will be subject to adjustment
in certain circumstances. In addition, following certain corporate
events that occur prior to the maturity date or Centrus' delivery
of a notice of redemption, Centrus will increase, in certain
circumstances, the conversion rate for a holder who elects to
convert its Notes in connection with such a corporate event or
notice of redemption, as the case may be. Prior to the close of
business on the business day immediately preceding August 1, 2030, the Notes will be convertible at
the option of the holders of the Notes only upon the satisfaction
of specified conditions and during certain periods. On or after
August 1, 2030 until the close of
business on the business day immediately prior to the maturity
date, the Notes will be convertible, at the option of the holders
of Notes, at any time regardless of such conditions. Upon
conversion, Centrus will pay cash up to the aggregate principal
amount of the Notes to be converted and pay or deliver, as the case
may be, cash, shares of Class A common stock of Centrus or a
combination of cash and shares of Class A common stock of Centrus,
at Centrus' election, in respect of the remainder, if any, of the
conversion obligation in excess of the aggregate principal amount
of the Notes being converted.
Centrus will not be able to redeem the Notes prior to
November 8, 2027. On or after
November 8, 2027, Centrus may redeem
the Notes at its option if the last reported sale price of the
Class A common stock of Centrus has been at least 130% of the
conversion price then in effect for at least 20 trading days
(whether or not consecutive) during any 30 consecutive trading day
period (including the last trading day of such period) ending on
and including the trading day immediately preceding the date on
which Centrus provides notice of redemption, at a redemption price
equal to 100% of the principal amount of the Notes to be redeemed,
plus accrued and unpaid interest, if any, to, but excluding, the
redemption date.
Holders of the Notes will have the right to require Centrus to
repurchase all or a portion of their Notes upon the occurrence of a
fundamental change (as defined in the indenture governing the
Notes) in cash at a fundamental change repurchase price of 100% of
their principal amount plus any accrued and unpaid interest to, but
not including, the fundamental change repurchase date.
When issued, the Notes will be Centrus' senior unsecured
obligations and will rank senior in right of payment to any of
Centrus' unsecured indebtedness that is expressly subordinated in
right of payment to the Notes; equal in right of payment to any of
Centrus' unsecured indebtedness that is not so subordinated;
effectively junior in right of payment to any of Centrus' secured
indebtedness, including Centrus' 8.25% Notes due 2027 (the
"existing notes"), to the extent of the value of the assets
securing such indebtedness; and structurally junior to all
indebtedness and other liabilities (including trade payables, but
excluding intercompany obligations (other than the secured
guarantee by United States Enrichment Corporation of the existing
notes) and liabilities of a type not required to be reflected on a
balance sheet of such subsidiaries in accordance with GAAP) of
Centrus' subsidiaries.
Centrus estimates that the net proceeds from the Offering will
be approximately $337.9 million (or
approximately $388.7 million if the
initial purchasers exercise their option to purchase additional
Notes in full), after deducting fees and estimated expenses.
Centrus intends to use the net proceeds from this offering for
general working capital and corporate purposes, which may include
investment in technology development or deployment, repayment or
repurchase of outstanding debt, capital expenditures, potential
acquisitions and other business opportunities and purposes.
The Notes were offered only to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act. The offer and sale of the Notes and the shares of
Class A common stock of Centrus issuable upon conversion of the
Notes, if any, have not been, and will not be, registered under the
Securities Act or the securities laws of any other jurisdiction,
and unless so registered, the Notes and such shares, if any, may
not be offered or sold in the United
States except pursuant to an applicable exemption from such
registration requirements.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any offer or
sale of, the Notes (or any shares of Class A common stock of
Centrus issuable upon conversion of the Notes) in any state or
jurisdiction in which the offer, solicitation, or sale would be
unlawful prior to the registration or qualification thereof under
the securities laws of any such state or jurisdiction.
About Centrus Energy Corp.
Centrus is a trusted supplier of nuclear fuel components and
services for the nuclear power industry. Centrus provides value to
its utility customers through the reliability and diversity of its
supply sources – helping them meet the growing need for clean,
affordable, carbon-free electricity. Since 1998, Centrus has
provided its utility customers with more than 1,850 reactor years
of fuel, which is equivalent to more than 7 billion tons of coal.
With world-class technical and engineering capabilities, Centrus is
pioneering production of High-Assay, Low-Enriched Uranium and is
leading the effort to restore America's uranium enrichment
capabilities at scale to meet America's clean energy, energy
security, and national security needs. Find out more at
centrusenergy.com.
Forward Looking Statements
This news release contains "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended, and the Private Securities Litigation Reform Act of
1995. In this context, forward-looking statements mean statements
related to future events, which may impact 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. Statements regarding the timing and amount of the
Offering, including the consummation of the Offering, the terms of
the Offering, the satisfaction of customary closing conditions with
respect to the Offering and the use of the net proceeds of the
Offering are also forward-looking statements. These forward-looking
statements are based on information available to us as of the date
of this news release and represent management's current views and
assumptions with respect to future events and operational, economic
and financial performance. Forward-looking statements are not
guarantees of future performance, events or results and involve
known and unknown risks, uncertainties and other factors, which may
be beyond our control.
For Centrus, particular risks and uncertainties (hereinafter
"risks") that could cause our actual future results to differ
materially from those expressed in our forward-looking statements
and which are, and may be, exacerbated by any worsening of the
global business and economic environment include but are not
limited to the following: risks related to the U.S. Department of
Energy ("DOE") not issuing any task orders to any awardee under any
of the high-assay low-enriched uranium ("HALEU") or Deconversion
contracts or any task orders to Centrus under either of those
contracts; risks related to Centrus not winning a task order under
the HALEU contract to expand its HALEU plant; risks related to DOE
not providing adequate share of the appropriated funding; risks
related to our ability to secure financing to expand our plant;
risks related to our ability to increase capacity in a timely
manner to meet market demand or our contractual obligations; risks
related to DOE not awarding any contracts to Centrus in response to
Centrus' remaining proposals; risks related to the war and
geopolitical conflicts and the imposition of sanctions or other
measures, including bans or tariffs, by (i) the U.S. or foreign
governments and institutions such as the European Union, (ii)
organizations (including the United Nations or other international
organizations), or (iii) entities (including private entities or
persons), that could directly or indirectly impact our ability to
obtain, deliver, transport or sell low enriched uranium ("LEU") or
the SWU and natural uranium hexafluoride components of LEU
delivered to us under the existing supply contract with the Russian
government-owned entity, TENEX, Joint-Stock Company ("TENEX")
("TENEX Supply Contract") or make related payments or deliveries of
natural uranium hexafluoride to TENEX; risks related to laws that
ban (i) imports of Russian LEU into the
United States, including the "Prohibiting Russian Uranium
Imports Act" ("Import Ban Act") or (ii) transactions with the
Russian State Atomic Energy Corporation or its subsidiaries, which
includes TENEX; risks related to our potential inability to secure
additional waivers or other exceptions from the ban or sanction in
a timely manner or at all in order to allow us to continue
importing Russian LEU under the TENEX Supply Contract or otherwise
doing business with TENEX or implementing the TENEX Supply
Contract; risks related to TENEX's refusal or inability to deliver
LEU to us for any reason including (i) U.S. or foreign government
sanctions or bans are imposed on LEU from Russia or on TENEX, (ii) TENEX is unable or
unwilling to deliver LEU, receive payments, receive the return of
natural uranium hexafluoride, or conduct other activities related
to the TENEX Supply Contract, or (iii) TENEX elects, or is directed
(including by its owner or the Russian government), to limit or
stop transactions with us or with the
United States or other countries; risks related to disputes
with third parties, including contractual counterparties, that
could result if we cannot receive, or otherwise are unable to
receive timely deliveries of LEU under the TENEX Supply Contract;
risks related to our dependence on others, such as TENEX, under the
TENEX Supply Contract, a subsidiary of Orano Cycle ("Orano"), under
our long-term commercial supply agreement with Orano, and other
suppliers (including, but not limited to, transporters) who
provide, or deliver, us the goods and services we need to conduct
our business and any resulting negative impact on our liquidity;
risks related to our ability to sell or deliver the LEU we procure
pursuant to our purchase obligations under our supply agreements
and the impacts of sanctions or limitations on imports of such LEU,
including those imposed under the 1992 Russian Suspension Agreement
as amended, international trade legislation and other international
trade restrictions or the Import Ban Act; risks related to the
increasing quantities of LEU being imported into the U.S. from
China and the impact on our
ability to make future LEU or SWU sales or ability to finance any
build out of our enrichment capacities; risks related to whether or
when government funding or demand for HALEU for government or
commercial uses will materialize and at what level; risks regarding
funding for continuation and deployment of the American Centrifuge
technology; risks related to (i) our ability to perform under our
agreement with the DOE to deploy and operate a cascade of
centrifuges to demonstrate production of HALEU for advanced
reactors (the "HALEU Operation Contract"), (ii) our ability to
obtain new contracts and funding to be able to continue operations
and (iii) our ability to obtain and/or perform under other
agreements; risks that (i) we may not obtain the full benefit of
the HALEU Operation Contract and may not be able or allowed to
operate the HALEU enrichment facility to produce HALEU after the
completion of the HALEU Operation Contract or (ii) the output from
the HALEU enrichment facility may not be available to us as a
future source of supply; risks related to existing or new trade
barriers and to contract terms that limit our ability to procure
LEU for, or deliver LEU to, customers; risks related to pricing
trends and demand in the uranium and enrichment markets and their
impact on our profitability; risks related to the movement and
timing of customer orders; risks related to the fact that we face
significant competition from major LEU producers who may be less
cost sensitive or are wholly or partially government owned; risks
that our ability to compete in foreign markets may be limited for
various reasons, including policies that favor indigenous suppliers
over foreign suppliers of goods and services; risks related to the
fact that our revenue is largely dependent on our largest
customers; risks related to our backlog, including uncertainty
concerning customer actions under current contracts and in future
contracting due to market conditions, global events or other
factors, including our lack of current production capability; risks
related to natural and other disasters, including 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; risks related to financial difficulties experienced by
customers or suppliers, including possible bankruptcies,
insolvencies, or any other situation, event or occurrence that
affect the ability of others to pay for our products or services in
a timely manner or at all; risks related to pandemics, endemics,
and other health crises; risks related to the impact and potential
extended duration of a supply/demand imbalance in the market for
LEU; risks related to reliance on the only firm that has the
necessary permits and capability to transport LEU from Russia to the United
States and that firm's ability to maintain those permits and
capabilities or secure additional permits; risks related to a
government shutdown or lack of funding that could result in program
cancellations, disruptions and/or stop work orders and could limit
the U.S. government's ability to make timely payments, and our
ability to perform our U.S. government contracts and successfully
compete for work; risks related to changes to the U.S. government's
appropriated funding levels for HALEU Operation Contract due to the
upcoming November elections or other reasons; risks related to
uncertainty regarding our ability to commercially deploy
competitive enrichment technology; risks related to the potential
for demobilization or termination of the HALEU Operation Contract;
risks that we will not be able to timely complete the work that we
are obligated to perform; risks related to the government's
inability to satisfy its obligations, including supplying
government furnished equipment necessary for us to produce and
deliver HALEU under the HALEU Operation Contract and processing
security clearance applications due to a government shutdown or
other reasons; risks related to our ability to obtain the
government's approval to extend the term of, or the scope of
permitted activities under, our lease with the DOE in Piketon, Ohio; risks related to cybersecurity
incidents that may impact our business operations; risks related to
our ability to perform fixed-price and cost-share contracts such as
the HALEU Operation Contract, including the risk that costs that we
must bear could be higher than expected and the risk related to
complying with stringent government contractual requirements; risks
related to attracting qualified employees necessary for the
potential expansion of our operations; risks related to our
long-term liabilities, including material unfunded defined benefit
pension plan obligations and postretirement health and life benefit
obligations; risks related to our existing notes; risks of revenue
and operating results fluctuating significantly from quarter to
quarter, and in some cases, year to year; risks related to the
impact of financial market conditions on our business, liquidity,
prospects, pension assets and insurance facilities; risks related
to Centrus' capital concentration; risks related to the value of
our intangible assets related to LEU's backlog and customer
relationships; risks related to the limited trading markets in our
securities; risks related to decisions made by our Class B common
stock stockholders regarding their investment in Centrus, including
decisions based upon factors that are unrelated to Centrus'
performance; risks that a small number of holders of our Class A
common stock (whose interests may not be aligned with other holders
of our Class A common stock) may exert significant influence over
the direction of Centrus and may be motivated by interests that are
not aligned with Centrus' other Class A stockholders; risks related
to (i) the use of our net operating losses ("NOLs") carryforwards
and net unrealized built-in losses ("NUBILs") to offset future
taxable income and the use of the Rights Agreement, dated as of
April 6, 2016 to prevent an
"ownership change" as defined in Section 382 of the Internal
Revenue Code of 1986, as amended (the "Code") and (ii) our ability
to generate taxable income to utilize all or a portion of the NOLs
prior to the expiration thereof and NUBILs; risks related to
failures or security breaches of our information technology
systems; risks related to our ability to attract and retain key
personnel; risks that we will be unable to obtain new business
opportunities or achieve market acceptance of our products and
services or that products or services provided by others will
render our products or services obsolete or noncompetitive; risks
related to actions, including reviews or audits, that may be taken
by the U.S. government, the Russian government, or other
governments that could affect our ability to perform under our
contractual obligations or the ability of our sources of supply to
perform under their contractual obligations to us; risks related to
our ability to perform and receive timely payment under our
agreements with the DOE or other government agencies, including
risks related to the ongoing funding by the government and
potential audits; risks related to changes or termination of our
agreements with the U.S. government or other counterparties, or the
exercise of contract remedies by such counterparties; risks related
to the competitive environment for our products and services; risks
related to changes in the nuclear energy industry; risks related to
the competitive bidding process associated with obtaining
contracts, including government contracts; risks related to
potential strategic transactions that could be difficult to
implement, that could disrupt our business or that could change our
business profile significantly; risks related to the outcome of
legal proceedings and other contingencies (including lawsuits and
government investigations or audits); risks related to the impact
of government regulation and policies or interpretation of laws or
regulations, including by the DOE, the U.S. Department of Commerce
and the U.S. Nuclear Regulatory Commission; risks of accidents
during the transportation, handling, or processing of toxic
hazardous or radioactive material that may pose a health risk to
humans or animals, cause property or environmental damage, or
result in precautionary evacuations, and lead to claims against
Centrus; risks associated with claims and litigation arising from
past activities at sites we currently operate or past activities at
sites we no longer operate, including the Paducah, Kentucky, and Portsmouth, Ohio, gaseous diffusion plants;
and other risks discussed in this news release and in our filings
with the SEC.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which apply only as of the date of this
news release. These factors may not constitute all factors that
could cause actual results to differ from those discussed in any
forward-looking statement. Accordingly, forward-looking statements
should not be relied upon as a predictor of actual results. Readers
are urged to carefully review and consider the various disclosures
made in this news release and in our filings with the SEC,
including our Annual Report on Form 10-K for the year ended
December 31, 2023, under Part II,
Item 1A - "Risk Factors" in our Quarterly Report on Form 10-Q for
the quarter ended September 30, 2024,
and in our filings with the SEC that attempt to advise interested
parties of the risks and factors that may affect our business. We
do not undertake to update our forward-looking statements to
reflect events or circumstances that may arise after the date of
this news release, except as required by law.
Contacts:
Investors: Dan Leistikow at
LeistikowD@centrusenergy.com
Media: Lindsey Geisler at
GeislerLR@centrusenergy.com
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SOURCE Centrus Energy Corp.