The EnergySolutions empire grew Tuesday as it purchased another company for more than a third of a billion dollars, underlining its emergence as a top business in the nuclear services industry.
Salt Lake-based EnergySolutions signed a definitive agreement to acquire Duratek, based in Columbia, Md., for $396 million. The amount includes assumption of Duratek's outstanding debt, according to a Duratek announcement released Tuesday.
"The acquisition will be funded through a combination of debt to be provided by a group of banks led by Citigroup, cash held by Duratek and EnergySolutions, and equity provided by the owners of EnergySolutions," the release said.
Duratek bills itself as a provider of safe, secure disposal services for radioactive material. Its Web site notes that it has permits for disposal at Envirocare in Utah as well as other sites. The company provides services for commercial and government customers.
EnergySolutions is to buy all outstanding shares of Duratek for $22 a share, a premium of 25.7 percent over the stock's price on Monday, according to Duratek.
The deal requires the approval of Duratek's stockholders, but the boards of directors of each company have approved it.
The formation of EnergySolutions itself was announced just last Thursday. The owners of Envirocare of Utah bought the British government radioactive waste cleanup company, BNG America, and merged it with Envirocare and an Envirocare division, Scientech D&D, to create EnergySolutions.
This project has been in the works for three years, according to Steve Creamer, the Utahn who is president and CEO of EnergySolutions.
Until Federal Trade Commission regulators approve the latest acquisition, the Maryland firm will continue working under the name Duratek. The FTC must review the acquisition for compliance with antitrust laws.
After regulators give the OK, expected in three to six months, Duratek too will be operating as EnergySolutions.
"We'll be one of the leading nuclear energy services companies," said Creamer.
Corporate headquarters will be at 423 W. 300 South, a new building at the location of the old Salvation Army building. About 150 to 200 employees will work there, while total employees, counting those of Duratek, will number more than 2,000 nationwide, Creamer said.
With BNG America, the new entity acquired the North American rights to technologies developed by that firm. BNG America belonged to the British government the initials derived from British Nuclear Group and Great Britain has been a leader in reprocessing spent nuclear fuel rods.
"We acquired some good, basic technology" involving reprocessing as carried out in the United Kingdom today, Creamer said. As America moves forward with reprocessing, he said he hopes EnergySolutions will be part of the effort.
"We believe that rather than Yucca Mountain or rather than PFS, we should be doing what the rest of the world has been doing," Creamer said. That is, reprocessing fuel rods.
Yucca Mountain is the name for the federal government's proposed permanent repository for the highly radioactive rods. PFS, or Private Fuel Storage, is the proposed temporary storage site for fuel rods that utilities would like to build in Skull Valley, Tooele County.
In 1976, Creamer said, then-President Jimmy Carter decided the United States would not get into reprocessing and issued a presidential order to that effect. Carter was worried about nuclear proliferation, because 3 percent or 4 percent of the reprocessed nuclear material would be weapons-grade, he added.
Since then, the order has remained in effect. Other countries reprocess their spent fuel rods, however, because 96 percent of the material may be reusable.
Japan, Norway and Sweden ship material to the United Kingdom for reprocessing, and the British send back fuel and waste. Mainland European countries have France reprocess their fuel rods.
"It's a very common operation" worldwide, he said.
The stumbling block to America's reprocessing fuel is not so much technological as political, according to Creamer.
The country's stance may change on that, he believes, but he has "no idea" when.
Meanwhile, Samuel W. Bodman, secretary of the U.S. Department of Energy, discussed the Global Nuclear Energy Partnership. In a briefing this week following President Bush's budget announcement, Bodman said the GNEP is a partnership to meet the world's electricity needs through safe, emissions-free nuclear power.
GNEP involves an initiative to separate and manage spent nuclear fuel "to separate the plutonium" and certain other material, and produce a substance not useful for making weapons but valuable to generate energy, Bodman said, according to a DOE news release.
Creamer commented, "It's obvious the administration is at least looking at it (reprocessing) positively, as are many members of Congress."
When the Duratek acquisition is complete, he said, the company will have major recycling and waste minimizing facilities at Oak Ridge and Memphis, Tenn., and Barnwell, S.C.
Regardless of whether reprocessing happens, EnergySolutions will be working on nuclear energy projects. "We think this is an incredibly important industry," Creamer said.
Among the company's goals is to work with universities in Utah to help educate top scientists and engineers in the field, he said. "We would like for Utah to become one of the centers of those educational opportunities," he said.
Creamer said the former Envirocare low-level radioactive waste disposal facility at the Clive, Tooele County, railroad siding would continue its present operations.
"The Clive facility will stay just like it is," he said. It will accept only Class A low-level waste.
"We have no plans to bring any different type of waste into our Clive facility," he said. The company would have liked to expand onto adjacent land it owns, called Section 29, but Gov. Jon Huntsman Jr. opposed it.
"We have sufficient capacity in Section 32," with retooling that was done, he said. "We have sufficient capacity for our needs out into the future."
Not everybody was delighted with the emergence of EnergySolutions. Jason Groenewold, director of the Healthy Environment Alliance of Utah, said he was concerned about the change.
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