[ RadSafe ] " Nordion Announces Decision in Arbitration with AECL Over Cancelled MAPLE Project "
jaro_10kbq at videotron.ca
Mon Sep 10 06:59:32 CDT 2012
Nordion Announces Decision in Arbitration with AECL Over Cancelled MAPLE
OTTAWA, Ontario--(BUSINESS WIRE)--Sep. 10, 2012
-- Nordion Inc. (TSX: NDN) (NYSE: NDZ) announced today that it has received
the decision in the confidential arbitration with Atomic Energy of Canada
Limited (AECL). Nordion was unsuccessful in its claim for specific
performance or monetary damages relating to AECL's cancelled construction of
the MAPLE facilities. The majority of the tribunal ruled 2:1 that Nordion's
claim against AECL in the arbitration was precluded under the terms of the
2006 Interim and Long-Term Supply Agreement (ILTSA) between Nordion and
AECL. Thus, Nordion was not entitled to a remedy under the ILTSA for the
unilateral termination by AECL of the construction of the MAPLE facilities.
The arbitrators dismissed AECL's counterclaim against Nordion, which claimed
damages for breach of contract in the amount of $250 million and other
Under the ILTSA, commercially reasonable efforts are required to maintain
isotope production from the NRU reactor until such time as Nordion has
established a satisfactory, long-term alternative supply. This supply is
important to the global healthcare system and Nordion's Medical Isotopes
"We began this process to protect the interests of patients, the nuclear
medicine community, our customers and employees with the goal of obtaining a
long-term, safe supply of medical isotopes," said Steve West, Chief
Executive Officer, Nordion. "We are disappointed with the outcome of the
arbitration. It was our clear objective to protect our shareholders'
investment in the MAPLE facilities. We intend to fully examine the
implications of the decision and assess options for our future courses of
action regarding this matter and long-term supply."
The MAPLE facilities were the nuclear reactors and processing facility that
were being constructed by AECL to serve as the source of Nordion's long-term
medical isotope supply. Nordion served AECL with a notice of arbitration
proceedings on July 8, 2008, after AECL and the Government of Canada
unilaterally terminated the construction and commissioning of the MAPLE
facilities. Nordion sought to compel AECL to complete the commissioning of
the MAPLE facilities or pay damages in lieu.
The MAPLE facilities were intended to replace AECL's National Research
Universal (NRU) reactor. The ILTSA agreement stipulated that AECL would
bring the MAPLE reactors into service commencing October 2008 to provide
Nordion with a 40-year supply of isotopes.
Under the arbitration provisions included in the ILTSA between Nordion and
AECL and the additional arbitration agreements between them, the parties
have limited review or appeal rights relating to certain matters of law.
Under Article 34 of the Commercial Arbitration Act (Canada) which applies,
if either party wishes to initiate an appeal, it must do so within three
months of the arbitration decision.
In the tribunal's decision, the arbitrators have yet to decide on the issue
of costs and requested that Nordion and AECL make submissions within 30
days. As the decision of the tribunal favors AECL, Nordion may be
responsible for a portion of AECL's costs, which could be material.
The arbitration decision leaves Nordion open to pursue its ongoing lawsuit
against AECL in the Ontario courts in relation to the 1996 Isotope
Production Facilities Agreement (IPFA). In the analysis of the decision,
although the arbitrators did not conclude on the issue, the view of the
majority was that a breach of contract by AECL did not occur under the
ILTSA. As a result, the IPFA court claim may be substantially less than the
C$1.6 billion Nordion is currently claiming. Nordion is pursuing its rights
under the IPFA.
Dividend and Normal Course Issuer Bid (NCIB)
The Company's priority uses of cash have been to invest in growth and
operations, and to return cash to shareholders, while leaving the business
with financial flexibility. During fiscal 2011 and 2012, the Company has
returned approximately $94 million dollars to shareholders by way of
dividends and share buybacks.
Nordion has decided, at this time, to suspend the payment of its quarterly
dividend. In addition, following the completion or cancellation of its
current automatic share repurchase plan, the Company will cease repurchasing
shares under the current NCIB.
This decision has been based on the uncertainty associated with several
factors. These include the potential payment of a portion of AECL's
arbitration costs, the recently announced internal investigation, pension
funding obligations and molybdenum-99 revenue and supply.
Forward Looking Statements
Certain statements contained in this news release constitute
"forward-looking statements". These statements are based on current beliefs
and assumptions of management, however are subject to known and unknown
risks, uncertainties and other factors that may cause actual results to
differ materially from the forward-looking statements in this news release.
For additional information with respect to certain of these beliefs,
assumptions, risks and uncertainties, please refer to Nordion's Annual
Information Form for fiscal 2011 available on SEDAR at http://www.sedar.com
and on EDGAR on http://www.sec.gov.
About Nordion Inc.
Nordion Inc. (TSX: NDN) (NYSE: NDZ) is a global health science company that
provides market-leading products used for the prevention, diagnosis and
treatment of disease. We are a leading provider of medical isotopes,
targeted therapies and sterilization technologies that benefit the lives of
millions of people in more than 60 countries around the world. Our products
are used daily by pharmaceutical and biotechnology companies, medical-device
manufacturers, hospitals, clinics and research laboratories. Nordion has
approximately 500 highly skilled employees in four locations. Find out more
at http://www.nordion.com and follow us at http://twitter.com/NordionInc
Tanya Pobuda, 613-592-3400 ext. 2280
tanya.pobuda at nordion.com
Ana Raman, 613-595-4580
investor.relations at nordion.com
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