SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 27, 2018
Centrus Energy Corp.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
6901 Rockledge Drive, Suite 800
Bethesda, MD 20817
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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement
On April 27, 2018, Centrus Energy Corp.’s operating subsidiary, United States Enrichment Corporation (together with Centrus Energy Corp., the “Company”) entered into a long-term agreement (the “Agreement”) with the French enricher, Orano Cycle (formerly, AREVA NC) (“Orano”) for the long-term supply of separative work units (“SWU”) contained in low enriched uranium (“LEU”) to the Company, nominally commencing in 2023.
Under the Agreement, the Company is obligated to purchase a minimum of approximately 2.4 million SWU over six (6) years. The Company may elect to begin deliveries as early as 2021 or to defer the commencement of purchases until 2024 and has the option to extend the six-year purchase period for an additional two (2) years. If the Company exercises its options for the two additional years, the minimum amount that the Company must purchase shall increase to approximately 3.7 million SWU.
The contract provides significant flexibility to adjust purchase volumes, subject to annual minimums and maximums that vary year by year.
The pricing for the SWU purchased by the Company is determined by a formula that uses a combination of market-related price points and other factors, and is subject to certain floors and ceilings. Prices are payable in a combination of dollars and Euros.
In addition to paying for the SWU in the LEU delivered by Orano, the Company will supply natural uranium for the natural uranium feed material component of the LEU.
U.S. imports of LEU from France are currently subject to an antidumping order that will remain in effect through at least the second quarter of 2019. Under the terms of the Agreement, Orano will have the right to partially limit the amount of LEU that can be delivered in the United States for so long as the LEU is subject to the antidumping order.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by the text of the agreement, a copy of which is expected to be filed as an exhibit to Centrus’ quarterly report on Form 10-Q for the second quarter ending June 30, 2018.
Item 7.01 Regulation FD Disclosure.
On May3, 2018, Centrus issued a press release announcing the event described in Item 1.01 of this report. A copy of this press release is included as Exhibit 99.1 to this report.
The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Centrus under the Securities Act of 1933 or the Exchange Act. A copy of the press release issued by Centrus in relation to the services agreement is furnished herewith pursuant to Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
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.
May 3, 2018
/s/ Marian K. Davis
Marian K. Davis
Senior Vice President, Chief Financial Officer and Treasurer
FOR IMMEDIATE RELEASE:
May 3, 2018
Centrus Signs Long-Term Supply Agreement with Orano
Deal Expands and Diversifies Centrus’ Supply Base to Support New Sales Opportunities
BETHESDA, Md. – Centrus Energy Corp. (NYSE American: LEU) announced today that it is expanding its supply arrangements with Orano Cycle (Orano), a global nuclear fuel cycle company based in France, thereby further diversifying and expanding Centrus’ enrichment supply base to support its customers’ requirements. Under an agreement signed on April 27, 2018, Orano will provide Centrus with a substantial long-term supply of separative work units (SWU) beginning after 2020. The supply from Orano provides Centrus with access to over 6 million SWU through 2030, a quantity that is equivalent to more than 50 reactor-years of nuclear fuel.
“This long-term supply agreement with Orano enhances our ability to meet the needs of current and future customers and reflects our commitment to be the most diversified global supplier of enriched uranium,” said Daniel B. Poneman, president and chief executive officer. “The added supply will help us compete for new sales opportunities around the world
so that we can continue to pursue our long-term goal of re-establishing a domestic uranium enrichment capability.”
“Through this long-term contract, Centrus and Orano reinforce their strong relationship, with the goal of enhancing diversity and security of supply for nuclear electricity producers,” said Antoine Troesch, senior executive vice president, Chemistry and Enrichment Business Unit, for Orano. “This contract shows the trust in Georges Besse 2, our state-of-the-art enrichment facility in Tricastin, France.”
The long-term agreement provides for deliveries from 2023 through 2028, with options for 2029 and 2030. Centrus has significant flexibility to adjust its purchase quantities as needed to meet its sales and delivery requirements subject to certain minimum purchase obligations.
The supply from Orano will enable Centrus to add new sales to its long-term order book, which stood at $1.3 billion as of December 31, 2017, and extends for more than a decade.
Centrus’ diverse base of supply now includes Orano and Joint Stock Company TENEX, along with its existing inventory and other sources of supply around the world.
About Centrus Energy
Centrus is a trusted supplier of nuclear fuel 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, the Company has provided its utility customers with more than 1,750 reactor years of fuel, which is equivalent to 7 billion tons of coal.
With world-class technical capabilities, Centrus offers turnkey engineering and advanced manufacturing solutions to its customers. The company is also advancing the next generation of centrifuge technologies so that America can restore its domestic uranium enrichment capability in the future. Find out more at www.centrusenergy.com.
This news 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”, “would” 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: 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; the impact and potential extended duration of the current supply/demand imbalance in the market for low enriched uranium (“LEU”); our dependence on others for deliveries of LEU including deliveries from the Russian government entity Joint Stock Company “TENEX” (“TENEX”) under a commercial supply agreement with TENEX (the “Russian Supply Agreement”); risks related to our ability to sell the LEU we procure pursuant to our purchase obligations under our supply agreements, including the Russian Supply Agreement; risks relating to our sales order book, including uncertainty concerning customer actions under current contracts and in future contracting due to market conditions and lack of current production capability; risks related to financial difficulties experienced by customers, including possible bankruptcies, insolvencies or any other inability to pay for our products or services; pricing trends and demand in the uranium and enrichment markets and their impact on our profitability; movement and timing of customer orders; risks associated with our reliance on third-party suppliers to provide essential services to us; risks related to trade barriers and contract terms that limit our ability to deliver LEU to customers; risks related to actions that may be taken by the U.S. government, the Russian government or other governments that could affect our ability or the ability of our sources of supply to perform under their contract obligations to us, including the imposition of sanctions, restrictions or other requirements; the impact of government regulation including by the U.S. Department of Energy and the U.S. Nuclear Regulatory Commission; the outcome of legal proceedings and other contingencies (including lawsuits and government investigations or audits); the competitive environment for our products and services; changes in the nuclear energy industry; the impact of financial market conditions on our business, liquidity, prospects, pension assets and insurance facilities; revenue and operating results can fluctuate significantly from quarter to quarter, and in some cases, year to year; and other risks and uncertainties discussed in this and our other filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2017. We do not undertake to update our forward-looking statements except as required by law.
Media: Jeremy Derryberry (301) 564-3392
Investors: Don Hatcher (301) 564-3460