Tuesday, 5 February 2013

Nordion in trouble?

Nordion in trouble? Nordion undertakes review of strategic options http://www.theglobeandmail.com/globe-investor/nordion-undertakes-review-of-strategic-options/article7919265/ "Nordion is one of the world’s leading producers of molybdenum-99, used in medical imaging, and it depends on raw material from AECL’s aging facility in Chalk River, Ont.
The plant has been operating since 1957, and while it is licensed to operate until 2016, its future beyond that is unclear. Nordion had hoped to force AECL to pay damages or complete two new reactors that would have ensured a long-term supply of the radioactive material it needs.
Nordion’s dispute with AECL turns on the Maple reactors, built to replace Chalk River. The reactors never worked properly, and AECL halted an effort to repair them in 2008. Nordion has argued that AECL is legally required to complete the reactors, or pay damages.
Despite the arbitration loss, it has not given up that objective, and on Jan. 18 it returned to court, amending its 2008 statement of claim against AECL in the Ontario Superior Court of Justice to seek damages of $243.5-million for negligence and breach of their production agreement.
Nordion has struggled to find an alternative supplier. It terminated a preliminary agreement with a subsidiary of Russia’s State Atomic Energy Corp. in October and said it would begin talks with a related Russian source.
But even if the negotiations result in a new deal, Nordion would obtain less material than previously thought, the company said then.
Moly-99 is not Nordion’s only product, and the company has said in the past that it expects future growth to be driven by its “targeted therapies” business, which includes TheraSphere, a liver cancer treatment. It also sells sterilization systems that use radiation, and isotopes used in sterilization. Those businesses do not depend on the Chalk River facility.
Nordion took a $24.1-million charge related to the ongoing litigation, and that, paired with higher income tax expenses, hurt its fourth-quarter results, even as revenue edged higher.
For the quarter to Oct. 31, it reported a loss of $43.5-million, or 70 cents a share, compared with a profit of $6.9-million, or 11 cents, a year earlier."

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