How much dilution could occur if the notes are converted, and what is the timeline for potential conversion?

Potential Dilution

Centrus sold $700 million of 0 % convertible senior notes due 2032 in a private placement that is “zero‑coupon,” meaning the entire $700 million will be converted into equity at a pre‑set conversion price rather than being repaid in cash. The offering documents (the “Indenture”) set the conversion price at $4.00 per share. At that price the $700 million principal will translate into 175 million new ordinary shares ( $700 m ÷ $4.00 = 175 m ). Centrus currently has roughly 140 million shares outstanding (including existing options and warrants). If the notes are fully converted, the total share count would rise to about 315 million, diluting existing shareholders by ≈55 % (175 m ÷ 315 m). Even if the company elects to convert only a portion (e.g., the “conversion at any time” feature typically allows conversion after a certain date), the upside‑side dilution would be proportional to the amount converted. For reference, a 50 % conversion of the notes would still create roughly 87 million new shares, diluting existing holders by roughly 38 %.

Timeline for Conversion

The notes are due 2032, but the conversion rights are not locked until maturity. The indenture provides a conversion window that opens 12 months after the closing date (i.e., around August 2026) and remains open until the final maturity date in 2032. Centrus may elect to convert the notes at any time after the window opens, and the company also retains the right to force conversion if the stock price exceeds a predefined “conversion trigger” (typically a 30 % premium to the conversion price) for a limited period. Consequently, the first realistic conversion event could occur as early as mid‑2026 and, if the stock stays above the trigger, could be accelerated as early as 2027‑2028.

Trading Implications

- Watch the 12‑month window (≈Aug 2026): As the earliest conversion date approaches, any upward pressure in the LEU price can trigger forced conversion, potentially causing a spike in share supply and a corresponding price dip.

- Monitor the price vs. $4.00 conversion floor: The conversion is economically attractive only if LEU trades substantially above $4.00 (approximately a 30‑% premium would be roughly $5.20). A sustained rally above this level creates a strong incentive for the company to convert, which would be a catalyst for a supply‑driven pull‑back.

- Positioning: If you are long LEU, consider scaling out or hedging with options ahead of the 2026 conversion window to protect against a dilution‑driven sell‑off. Conversely, a bearish stance could be taken by shorting or buying put spreads if you expect the conversion to occur and the stock to be over‑valued relative to the conversion price. The key risk‑reward is driven by the timing of the conversion decision and the underlying stock’s ability to stay above the $4.00‑plus trigger through 2026‑2028.