Companies agree to new supply terms
Ottawa isotope maker Nordion Inc. (TSX:NDN) has settled with Atomic Energy of Canada Ltd. (AECL) over the latter’s decision to mothball Maple nuclear reactors several years ago against Nordion’s wishes.
Steve West is the CEO of Nordion (Photo supplied).
The agreement will provide Nordion with $15 million in cash from AECL. The Ottawa company will further release AECL from a $244 million claim of damages it asked for in January after an arbitration decision which removed the federal government from the statement of claim.
AECL will in turn release claims on Nordion for $47 million in arbitration costs and $80 million in damages. The nuclear energy company said in a statement that this resolves all legal matters related to the dispute.
“This resolution provides greater clarity for Nordion and removes the uncertainty and liability around these matters,” added Steve West, CEO of Nordion, in a statement from his own company.
“Nordion is now better positioned to focus on the needs and priorities of our business, including our important relationship with AECL, with a continued view to enhancing shareholder value and creating new opportunities for the company and our customers.”
That includes a new, non-exclusive agreement between Nordion and AECL for isotope supply, which ends Oct. 31, 2016.
“This settlement reflects AECL’s planned exit from the production of the medical isotope molybdenum-99 using the company’s National Research Universal reactor in the 2016 timeframe, and AECL’s objective of creating commercial opportunity and reducing financial risk for Canadian taxpayers,” AECL said in a statement.
The cost of supplying the medical isotopes will come through a revenue-sharing scheme, with the percentage of AECL’s revenue share increasing starting in 2014.
There are several ways in which the parties can terminate the agreement. These include Nordion finding an alternate isotope supply, or if Nordion does not meet a minimum purchase quantity, or if AECL’s isotope production facilities are closed permanently.
Nordion will also continue waste disposal with AECL until Oct. 31, 2026.
The two sides began their disagreement after AECL decided not to use the Maple nuclear reactors, which were planned for medical imaging, as the project overran its costs and scheduled start date.