Stock sale of uranium agency approved

The Treasury Department has approved a plan to privatize the U.S. Enrichment Corp. through a public stock offering that could net the government more than $2 billion.

Under the plan, USEC, which supplies enriched uranium for use in commercial nuclear power plants, would offer 100 million shares of stock for $13.50 to $16.50 each, resulting in proceeds of $1.35 billion to $1.65 billion. USEC says it will also borrow $550 million from banks and pay $500 million to the Treasury in connection with the sale. As a result, the government could receive up to $2.15 billion in what will be one of the largest privatizations in American history.

According to USEC officials, the corporation has a 75 percent share of the North American market for enriched uranium and 40 percent of the world market.

The announcement of the stock sale culminates a lengthy privatization process that began with the creation of USEC in the 1992 Energy Policy Act as the first step in transferring federal uranium enrichment operations to the private sector. In 1995, USEC officials proposed exploring "dual-path" privatization, saying they would consider both a stock sale and the sale of the corporation to a private company.

The Wall Street Journal reported Tuesday that the Treasury Department had rejected bids from two groups of companies, one led by Lockheed Martin Corp. and the other by General Atomics Corp. William J. Rainer, chairman of USEC's board of directors, said the board unanimously voted to go with a public stock offering instead.

The Journal also reported that Sen. Pete Domenici, R-N.M., has asked the Clinton administration to conduct a new national security review of the USEC proposal. Domenici is concerned about reports showing that USEC has 30 million more pounds of unenriched uranium on its hands than had previously been reported. Efforts to sell that material could hurt the government's plan to have USEC purchase $8 billion worth of uranium from Russia as part of an ongoing effort to remove weapons-grade materials from the former Soviet Union.