There is a Dec. 29 deadline to object, and a possible Jan. 13 court hearing if there is an objection, to a Dec. 15 motion by Energy Future Holdings to reject a uranium supply contract with Japan’s Itochu Corp.
In April of this year, Energy Future Holdings and various Texas subsidiaries, including Luminant Generation Co. LLC, filed for Chapter 11 protection at the U.S. Bankruptcy Court for the District of Delaware. Bankruptcy rules allow a company in Chapter 11 to reject contracts or leases that it considers unduly burdensome.
Said the Dec. 15 motion about the Itochu contract: “In this case, the Debtors, in their sound business judgment, have determined that the Contract is not optimal for the Debtors in light of their current business needs, nor is it a source of potential value for their future operations, creditors, or other parties in interest. Absent rejection, the Contract would impose unnecessary ongoing obligations on the Debtors. In particular, a delivery of natural uranium concentrates under the Contract is scheduled for December 31, 2014, at a price that is not favorable to the Debtors. Based on a cost-benefit analysis, the Debtors have determined, in the sound exercise of their reasonable business judgment, that the Contract should be rejected because it can be readily replaced by an alternative cheaper contract that will provide significant savings to the Debtors’ estates.”
Robert Frenzel, Senior Vice President and Chief Financial Officer of Luminant Generation, said in supporting testimony: “Luminant Generation, as buyer, and Itochu Corporation, as seller, entered into the Contract. I understand that the Debtors have determined that (a) the prices under the Contract are substantially above current market prices, (b) the Debtors can source natural uranium concentrate on better economic terms pursuant to other contracts or from other potential uranium vendors, and (c) rejection of the Contract would result in significant savings to their estates. Furthermore, negotiations with Itochu are unlikely to be productive at this time.”