Nov. 2, 2009 (Business Wire) -- USEC Inc. (NYSE:USU) today provided an update on its effort to address technical and financial concerns that have been raised by the Department of Energy (DOE) during its review of USEC’s application to the Loan Guarantee Program.

“Although we were disappointed with DOE’s decision in August to delay final review of our application, we still believe that our investment in the American Centrifuge technology and plant is a path to long-term value for our shareholders. We are sharply focused on resolving the concerns DOE has raised,” said John K. Welch, USEC president and chief executive officer.

“Following our review of machine assembly quality assurance procedures, we have reassembled about a dozen AC100 centrifuges and incorporated updated components. We have 10 of these machines installed and spinning at the America Centrifuge Plant and expect to have about two dozen machines reassembled by the end of this month. We anticipate operating these commercial, production-ready AC100 machines in our Lead Cascade test program in early 2010,” Welch said.

“DOE officials have told us they want to see the project succeed for a number of policy reasons. The independent engineer’s report on our project prepared for DOE provides us with guidelines for technical and financial improvements that need to be made. We have met with DOE officials and will be presenting a plan to meet all of their technical and reliability concerns. These concerns will be addressed before we update our application to the Loan Guarantee Program,” he said.

“A substantial portion of our recent effort has been to focus on ways to mitigate cost risk for the project and the company’s ability to manage that risk, which includes our strategic alternatives,” Welch said. “It is our plan to present a revised and improved financial structure as part of our updated submission to DOE.”

We have retained a financial advisor to explore strategic alternatives for the Company. We are considering all options, including a possible sale of the Company or other business combination transaction. There can be no assurance regarding the timing of or whether the Board of Directors will elect to pursue any of the strategic alternatives it may consider, or that any such alternatives, if pursued, will be consummated.

On August 4, 2009, DOE and USEC announced an agreement to delay a final review of our loan guarantee application for the ACP until at least early 2010. As a result, USEC began to demobilize the American Centrifuge project in order to preserve liquidity as we evaluate the strategic options for the future of the project. In parallel, we are continuing American Centrifuge demonstration activities, evaluating how best to configure the project on a go-forward basis, and seeking to reduce technical and financial risk for the project.

Since August, over 1,300 project jobs have been lost as a result of demobilization, including approximately 120 jobs at USEC and the remainder from direct jobs at our suppliers. Several thousand indirect jobs have also been affected. Job losses have occurred in eight states, with Ohio and Tennessee having the largest job losses.

Construction work on the plant infrastructure and finalizing the balance-of-plant design ceased in August. The plant design work is approximately 80 percent complete and would resume following a decision to remobilize the project. Because we have delayed high-volume machine manufacturing, work at all of our strategic suppliers has been sharply reduced.

USEC continues its Lead Cascade testing program in Piketon, Ohio. The prototype centrifuges operating there for more than two years have accumulated approximately 275,000 machine hours. Data from this testing program has provided valuable assembly, operating and maintenance information, as well as operations experience for the American Centrifuge staff. The prototype machines continue to operate.