Centrus offers new notes due 2027, preferreds and cash in exchange for 8% PIK notes

By Susanna Moon

Chicago, Jan. 5 – Centrus Energy Corp. began a private exchange offer for its $234,574,504 of outstanding 8% pay-in-kind toggle notes due 2019/2024.

In exchange, Centrus is offering up to $85 million 8¼% senior secured notes due 2027, $120 million 7½% cumulative redeemable preferred stock and $30 million in cash, according to a company announcement.

The total exchange value will be $362.36 of new notes plus $509.75 of preferred stock and a cash payment of $135.39 for each $1,000 principal amount of notes tendered for exchange by the early deadline of 5 p.m. ET on Jan. 19.

The total exchange amount includes an early tender premium of $7.50 in cash per $1,000 principal amount of notes tendered for exchange before the early deadline.

Holders who tender after the early deadline will receive the base exchange amount of $362.36 of new notes plus $509.75 of preferred stock and a cash payment of $127.89.

The exchange will remain open until 11:59 p.m. ET on Feb. 2.

The new notes will rank equally in right of payment with all of the company’s existing and future unsubordinated debt other than the company’s issuer senior debt and limited secured acquisition debt. The new notes will rank senior in right of payment to all of the company’s existing and future subordinated debt. The new notes will be guaranteed on a subordinated and limited basis by the company’s subsidiary, United States Enrichment Corp.

The terms of the new notes will be substantially similar to those of the outstanding notes after they are amended, except for the interest rate and maturity. In addition, the new notes will not include termination provisions for the guarantee of the outstanding notes and will include restrictions on certain transfers of cash to acquire equity interests.

The exchange is contingent on tenders of at least $211.12 million principal amount of notes.

Centrus said it has entered into support agreements with some noteholders, including class B common shareholders Toshiba America Nuclear Energy Corp. and BWX Technologies, Inc., which together hold about $102.4 million principal amount, or 43.6%, of the outstanding notes.

The company is also soliciting consents to amend the notes to

• Amend the existing exception for transfer of cash to permit the transfer of cash and cash equivalents by the guarantor;

• Expand the definition of credit facility to facilitate the company’s flexibility to incur senior debt;

• Permit the transfer or contribution of assets other than cash or cash equivalents to joint venture entities or partners for fair value;

• Exempt asset transfers permitted under the original indenture from the definition of change of control;

• Conform the definition of issuer senior debt, designated senior claims, collateral and security documents to the definitions in the new notes indenture;

• Make the lien securing the guarantee of the outstanding notes rank pari passu with the lien securing the guarantee of the new notes pursuant to a pari passu intercreditor agreement;

• Provide that the outstanding notes will be senior in right of payment to limited secured acquisition debt;

• Specify a form of intercreditor agreement under which liens securing the outstanding notes will be subordinated to liens securing limited secured acquisition debt in the same manner as is the case with designated senior claims, with respect to the applicable collateral;

• Specify a form of intercreditor agreement pursuant to which the new notes and the outstanding notes will rank senior in right of payment and the liens securing the new notes and the outstanding notes will rank senior to any finance debt of any new subsidiary acquired with cash of the issuer; and

• Update the form of junior lien intercreditor agreement annexed to the original indenture with the form annexed to the new notes indenture.

Holders may not consent to the proposed amendments without tendering their notes and they may not tender their outstanding notes without consenting to the proposed amendments.

The exchange requires consents from holders of a majority of the outstanding notes.

D.F. King (212 269-5550 or 800 848-3409) is the exchange agent.

Centrus is a Bethesda, Md.-based supplier of nuclear fuel and advanced technology services.

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