nuclear-news

Uncertain future for nuclear-related industries

an accident or other significant event “could result in increased regulation, less public support for nuclear fueled energy, lower demand for uranium and lower uranium prices.”

Japan’s material adverse change: from financings to M&A | Financial Regulatory Forum   Reuters.com, by John Mackie, 28 March 11“………the business and legal communities cannot stand still, as they deal with several quite-unexpected ripple effects. Both M&A and capital markets transactions have suffered, and disclosure practices are now coming under review. Set against a backdrop of plummeting stock prices, companies in nuclear-related industries are caught in their own battle to sustain themselves……….

The impact on the nuclear industry in the immediate aftermath of the Japanese crisis has been dramatic. Stock prices for uranium mining companies have plummeted. Some companies have local operations, and must confirm the well-being of colleagues and families. Others have been left without key inputs to their supply chain.

The ramifications of the situation on public issuers in the nuclear industry and their counsel are widespread. Several issues are worth considering in light of the events in Japan – the extent to which prior disclosures addressed the potential of such an event, the impact of such events on financings, the impact on M&A transactions and the prospects of further regulatory action.

NUCLEAR REGULATION

Starting with the latter first – the reaction of various governments has been swift. China and Venezuela announced that they have frozen plans to build more nuclear power plants. The Canadian Nuclear Safety Commission has called for an inspection of all major facilities in Canada…….

In China, however, Japan’s ongoing crisis at the Fukushima Daiichi plant has had an immediate chilling effect. On March 16, China’s Environmental Protection Agency announced a nationwide suspension of nuclear plant approvals, bringing the country’s ambitious nuclear energy plans to a screeching halt…….

DISCLOSURE

Even for those not in the middle of a significant deal, Fukushima’s lessons must be learned, as disclosure issues remain for all public companies. While all power plants carry some risk of harm to persons or property, nuclear power plants are viewed as unique due to the potential for exposure to radiation…….
An accident at a nuclear reactor anywhere in the world could impact on the continued acceptance by the public and regulatory authorities of nuclear energy and the future prospects for nuclear generators,…….
As Cameco notes in its Annual Information Form, “Although the safety record of nuclear reactors has generally been very good, there have been accidents and other unforeseen problems in the former USSR, the United States and in other countries.” In addition to “loss of life, property damage and environmental damage,” an accident or other significant event “could result in increased regulation, less public support for nuclear fueled energy, lower demand for uranium and lower uranium prices.”

Indeed, the potential impact of the events in Japan on uranium prices and demand has already been noted by U.S.-based Uranium Energy Corp. The company notes that the spot market for uranium has seen “seesaw movement,” with a current downward trend as a result of several factors, including the “unforeseen developments at the Fukushima Nuclear Power Plant”….

Japan’s material adverse change: from financings to M&A | Financial Regulatory Forum | Analysis & Opinion | Reuters.com

March 29, 2011 - Posted by Christina Macpherson | 2 WORLD, business and costs, Uranium