UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 11, 2015
Centrus Energy Corp.
(Exact name of registrant as specified in its charter)
| Delaware | 1-14287 | 52-2107911 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
Two Democracy Center
6903 Rockledge Drive
Bethesda, MD 20817
(301) 564-3200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure.
On September 11, 2015, Centrus Energy Corp. (the “Company”) issued a press release announcing that Oak Ridge National Laboratory will extend the Company’s contract for advanced uranium enrichment centrifuge research at a reduced level.
A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated by reference herein. Copies of the fact sheets referenced in the press release are attached hereto as Exhibits 99.2 and 99.3, respectively, and incorporated by reference herein.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K 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 the Company’s expected future business and financial performance, and often contain words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “will”, “should”, “could” or “may” and other words of similar meaning. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For the Company, particular risks and uncertainties that could cause actual future results to differ materially from those expressed in the Company’s forward-looking statements include risks related to the dependency on government funding or other government support for the American Centrifuge project from Congressional appropriations, including for the Company’s contract discussed in this Current Report on Form 8-K, or on actions by DOE or Congress; changes in U.S. government priorities and the availability of government support for the American Centrifuge project; uncertainty regarding the Company’s ability to commercially deploy the American Centrifuge project; uncertainty regarding the timing and structure of the U.S. government program for maintaining a domestic enrichment capability to meet national security requirements and the Company’s role in such a program; the impact of actions the Company has taken or might take in the future to reduce spending on the American Centrifuge project, including the potential loss of key suppliers and employees and impacts to cost, schedule and the ability to remobilize for commercial deployment of the American Centrifuge Plant; the impact of nuclear fuel market conditions and other factors on the economic viability of the American Centrifuge project without additional government support and on the Company’s ability to finance the American Centrifuge project and the potential for a further demobilization or termination of the American Centrifuge project; risks related to the costs associated with the reduction in workforce and the further demobilization of the American Centrifuge project; uncertainty regarding the Company’s ability to achieve targeted performance over the life of the American Centrifuge Plant which could affect the overall economics of the American Centrifuge Plant; risks related to the Company’s significant long-term liabilities including material unfunded defined benefit pension plan obligations and postretirement health and life benefit obligations; risk that the matters discussed in this Current Report on Form 8-K may have other impacts on the Company’s business, liquidity, prospects, pension assets and insurance facilities; and other risks and uncertainties discussed in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on the Company’s website www.centrusenergy.com. The Company does not undertake to update its forward-looking statements except as required by law.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits |
| Exhibit Number |
Description | |
| 99.1 | Press Release, dated September 11, 2015. | |
| 99.2 | Fact Sheet: U.S. Advanced Centrifuge Research: Current Program and Impact on Funding Reductions. | |
| 99.3 | Fact Sheet: National Security Importance of U.S. Enrichment Capability. | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Centrus Energy Corp.
| ||||||
| September 14, 2015 |
By: | /s/ Dennis J. Scott | ||||
| Dennis J. Scott | ||||||
| Deputy General Counsel, Director, Corporate Compliance & Assistant Secretary | ||||||
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press Release, dated September 11, 2015. | |
| 99.2 | Fact Sheet: U.S. Advanced Centrifuge Research: Current Program and Impact on Funding Reductions. | |
| 99.3 | Fact Sheet: National Security Importance of U.S. Enrichment Capability. | |
Exhibit 99.1
|
|
|
FOR IMMEDIATE RELEASE:
September 11, 2015
ORNL Will Extend Centrus’ Contract for
Advanced Uranium Enrichment Centrifuge Research at Reduced Level
| • | Will extend contract for one year |
| • | Funding cut by approximately 60 percent |
| • | Continues technology development activities at Oak Ridge facilities |
| • | Revenue used for Piketon operations discontinued |
| • | Reduction in funding may require layoffs |
BETHESDA, Md. – Centrus Energy Corp. (NYSE MKT: LEU) confirmed today that Oak Ridge National Laboratory (ORNL) has informed Centrus that it intends to extend its contract with the Company at a reduced level for research on the world’s most advanced uranium enrichment centrifuges. DOE’s decision to provide reduced funding will support continued developments of the company’s American Centrifuge technology – which have long-term importance for our national and energy security.
The new contract will cover the period from October 1, 2015, to September 30, 2016, with the possibility for additional extensions. It excludes continued operations of America’s only operating cascade of advanced uranium enrichment centrifuges in Piketon, Ohio. Funding will be reduced by approximately 60 percent to $35 million per year, and the scope of activities will be limited to development activities in Oak Ridge, Tennessee.
“While obviously we are disappointed by the decision to significantly downsize America’s advanced centrifuge program, we appreciate the Laboratory’s recognition that the technology has been effectively demonstrated over the last two years of hard work at Piketon,” said Centrus Vice President Steve Penrod, who oversees the American Centrifuge program for the company. “We will work with the Laboratory and with Congress to protect as much of the core capabilities of the program as possible so that the technology will remain ready for deployment when the U.S. government calls upon it for national security purposes.”
“In the coming weeks, we will explore options to protect the technology and our workers in Ohio, whose expertise, creativity, and dedication represent an invaluable asset for the Nation,” said Daniel B. Poneman, president and CEO of Centrus. “Cuts to our workforce would impose hardship on families and communities, while jeopardizing future progress. We will do all that we can to ease transitions while preserving as much of our scientific, technical, and industrial expertise as we can with the available funding.”
A fact sheet describing the national security importance of preserving U.S. leadership in uranium enrichment technology is available at:
http://www.centrusenergy.com/sites/default/files/National%20Security%20Importance%20of%20U.S.%20Enrichment%20Capability.pdf
Centrus Energy Corp. • 6903 Rockledge Drive, Bethesda, MD 20817-1818 • T: 301-564-3391 • centrusenergy.com • @centrus_energy
ORNL Will Extend Centrus’ Contract for Advanced Uranium Enrichment Centrifuge Research at Reduced Level
Page 2 of 2
A fact sheet detailing the existing advanced centrifuge program and the impact of the funding reductions is available at:
http://www.centrusenergy.com/sites/default/files/Fact%20Sheet%20on%20Existing%20Program %20and%20Reductions.pdf
Centrus anticipates that it will incur costs, which are being evaluated, associated with the reduction in workforce and the further demobilization of the program. Should closure of the Piketon, Ohio, facility be required, Centrus would incur still further costs associated with that closure and return of the facility in compliance with U.S. Nuclear Regulatory Commission requirements and pursuant to its lease with DOE.
About Centrus Energy Corp.
Centrus Energy Corp. is a trusted supplier of enriched uranium fuel for commercial nuclear power plants in the United States and around the world.
###
Forward-Looking Statements:
This press 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” 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 related to the dependency on government funding or other government support for the American Centrifuge project from Congressional appropriations, including for our contract discussed in this press release, or on actions by DOE or Congress; changes in U.S. government priorities and the availability of government support for the American Centrifuge project; uncertainty regarding our ability to commercially deploy the American Centrifuge project; uncertainty regarding the timing and structure of the U.S. government program for maintaining a domestic enrichment capability to meet national security requirements and our role in such a program; the impact of actions we have taken or might take in the future to reduce spending on the American Centrifuge project, including the potential loss of key suppliers and employees and impacts to cost, schedule and the ability to remobilize for commercial deployment of the American Centrifuge Plant; the impact of nuclear fuel market conditions and other factors on the economic viability of the American Centrifuge project without additional government support and on our ability to finance the American Centrifuge project and the potential for a further demobilization or termination of the American Centrifuge project; risks related to the costs associated with the reduction in workforce and the further demobilization of the American Centrifuge project; uncertainty regarding our ability to achieve targeted performance over the life of the American Centrifuge Plant which could affect the overall economics of the American Centrifuge Plant; risks related to our significant long-term liabilities including material unfunded defined benefit pension plan obligations and postretirement health and life benefit obligations; risk that the matters discussed in this press release may have other impacts on our business, liquidity, prospects, pension assets and insurance facilities; and other risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and quarterly reports on Form 10-Q, which are available on our website www.centrusenergy.com. We do not undertake to update our forward-looking statements except as required by law.
Contact:
Media: Jeremy Derryberry (301) 564-3392
Investors: Don Hatcher (301) 564-3460
Exhibit 99.2
September 11, 2015
FACT SHEET: U.S. Advanced Centrifuge Research:
Current Program and Impact of Funding Reductions
Background on Current Program (ACTDO Agreement):
Oak Ridge National Laboratory was tasked by the U.S. Department of Energy to assist in developing a path forward for achieving a reliable and economical domestic uranium enrichment capability that supports U.S. national security requirements. To that end, in May 2014, the Laboratory initiated the American Centrifuge Technology Demonstration and Operation (ACTDO) agreement. Under the ACTDO agreement, ORNL contracted with Centrus for research, development and demonstration of Centrus’ American Centrifuge Technology — the only U.S.-origin uranium enrichment technology currently available for national and energy security purposes.
With revenues from the contract, Centrus has been operating a cascade of the world’s most advanced centrifuges in Piketon, Ohio, to demonstrate the long-term performance and reliability of the machines under actual operating conditions. Our team of scientists, engineers, and technicians have validated the safety and effectiveness of the machines. In addition, the team has been identifying, implementing, and testing upgrades to the design to deliver further improvements in cost, performance, and reliability.
Impact of Funding Reductions:
The reduced funding will allow for the continued operation of the test facility and engineering capability in Oak Ridge, Tennessee, but will not support ongoing centrifuge operations in Piketon, Ohio. Centrus currently employs 280 technical and other staff in Piketon.
The funding reduction would have a significant impact on the project’s skilled workforce, which today has 3,400 combined years of experience with advanced centrifuges for uranium enrichment – a classified and highly specialized technology. This expertise is critical to the United States’ ability to deploy a national security capability in the future.
The company will evaluate possible options for the Ohio facility. Full demobilization of the plant — and the loss of significant operational expertise — could raise costs and technical risk while extending the construction timeline of any subsequent effort to reconstitute that capability.
Exhibit 99.3
FACT SHEET: National Security Importance of U.S. Enrichment Capability
The shutdown of the Paducah Gaseous Diffusion Plant for economic reasons in 2013 left the United States without any industrial scale domestic uranium enrichment capability for the first time since the Manhattan Project. Restoring this capability is important to America’s national and energy security for four reasons:
| 1) | Maintaining the nuclear deterrent. A domestic enrichment capability is needed to produce tritium, a critical component of nuclear weapons that decays within 12 years and must be replenished to ensure the continued effectiveness of America’s nuclear deterrent. The American Centrifuge technology is the only viable U.S. technology capable of meeting U.S. national security needs for enriched uranium. (Long-standing U.S. policy and international treaties prohibit the use of foreign technology for national security purposes.) Even if existing tritium supplies can be extended, it is more cost-effective in the long run to preserve a national security capability than to lose the workforce and facilities and attempt to rebuild both some years later from scratch. |
| 2) | Meeting the long-term fuel needs of the U.S. Navy. The entire U.S. fleet of aircraft carriers and submarines – a cornerstone of America’s force projection and survivable deterrent — are powered by highly-enriched uranium that was produced in a U.S. enrichment plant that closed in 1992. While America’s existing stockpile of highly-enriched uranium from the Cold War is sufficient to meet the U.S. Navy’s anticipated needs for several decades, ultimately we will need more to power our carriers and submarines. Additional naval reactor fuel could also be needed earlier (or perhaps later) than currently projected — depending on the future size of the U.S. Navy and the to-be-determined power requirements of the next generation of ships with high energy lasers and other advanced weapons systems. |
| 3) | Reducing the danger of nuclear proliferation. For decades, American leadership in uranium enrichment gave the U.S. government global influence as a major supplier of reactor fuel for countries around the world. This enabled the United States to require the strongest nonproliferation safeguards as a condition of long-term peaceful nuclear cooperation. Unfortunately, U.S. dominance in the market has been eroding since the late 1970s.1 As other nations developed and deployed centrifuge technology, the United States abandoned plans for a new centrifuge enrichment plant in the 1980s and did not replace its aging, increasingly uneconomical Cold War enrichment plants – the last of which was closed in 2013. |
| Today, foreign enrichment suppliers dominate the global enrichment market. Restoring U.S. enrichment capabilities will help maintain a strong U.S. voice in the global norms governing nonproliferation and support strong nonproliferation standards for decades to come. |
| 4) | Strengthening U.S. energy security. Nearly 20% of America’s electricity comes from nuclear power. Restoring American enrichment capability will support the security, diversity, and price competitive fuel supplies that U.S. utilities require. |
| 1 | The only enrichment plant physically located in the U.S. is foreign owned and uses foreign technology. Counting that facility, U.S. enrichment capacity has fallen by 86% since the 1980s. |