In late March, I called out USEC
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
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
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 Given its outdated assets, this company has no future without the American Centrifuge Plant, and hence without outside capital.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.