Well, uncertainty has given way to certainty. Unfortunately for USEC
investors, the certainty is that USEC will not be receiving the DOE
loan. The government said the company had yet to clear "technical and
financial hurdles" in rejecting the application Tuesday.
USEC, in turn, announced it will take steps to demobilize its
American Centrifuge Plant and explore strategic alternatives. I presume
that means a sale to someone like McDermott (NYSE: MDR) subsidiary B&W, or Shaw Group's (NYSE: SGR) buddy Westinghouse Electric. One analyst suggested General Electric (NYSE: GE) as another potential bidder, but I would think GE is rather preoccupied with its global laser enrichment venture.
Interestingly, the only other competitor vying
for this DOE money is another Shaw Group collaborator -- France's
Areva. At first, you might think the Obama administration would catch
some serious heat for picking a company part-owned by the French
government over a homegrown enrichment shop. But jobs are jobs, and
Areva is investing significant resources in the American nuclear
revival. Just look at the recent groundbreaking of Areva's and Northrop Grumman's (NYSE: NOC) heavy components facility in Newport News, Va., which promises to bring 500 jobs for skilled workers to that state.
Anyway, back to USEC. I told you guys this was a highly speculative investment. The Motley Fool CAPS community, which has been overwhelmingly bullish
on the stock, just got this one utterly wrong. I believe that those who
jumped in and bought shares on the plunge, or gave the stock a fresh
thumbs-up in CAPS, are wrong as well. Given its outdated assets, this
company has no future without the American Centrifuge Plant, and hence
without outside capital. I just don't see any potential acquirer
rushing in to pay more than $1 billion for this company (don't forget
the debt load), with USEC boxed in to this degree.
Copyright 2009 by United Press International.
(NYSE: 
Post new comment