MDS Announces New Agreement on MAPLE Reactor Project
22 Février 2006 - 1:00PM
PR Newswire (US)
AECL to pay $25 million and provide all required capital to
complete project TORONTO, Feb. 22 /PRNewswire-FirstCall/ -- MDS
Inc. (TSX: MDS; NYSE: MDZ), a global life sciences company, today
announced the conclusion of a comprehensive mediation process with
Atomic Energy of Canada Limited (AECL) related to the MAPLE reactor
project. Under the new agreement, AECL will assume complete
ownership of the MAPLE facilities and be responsible for all costs
associated with completing the project and the production of
medical isotopes. "I am very pleased with the outcome of this
process. This new agreement provides a solid basis for both parties
to move forward and successfully complete this project. It protects
MDS shareholders from further capital costs related to the
commissioning of MAPLE and creates a more economically viable
relationship going forward that allows us to continue to provide
these important medical imaging products to patients around the
world," said Stephen P. DeFalco, President and Chief Executive
Officer, MDS Inc. Under the new agreement: - AECL will assume
ownership of this asset, - AECL will be responsible for all future
capital and operating costs for the project, - AECL will
immediately pay MDS $25 million, - MDS and AECL have entered into a
40-year supply agreement on terms similar to the current NRU supply
agreement, and - AECL will acquire all inventories associated with
the MAPLE project. The cost of isotopes under the new agreement is
similar in structure to the existing NRU arrangement whereby MDS
pays AECL a percentage of its medical isotope revenues. For MAPLE
produced isotopes, MDS's cost will be slightly higher than the
current NRU agreement. If the new agreement were in effect today,
MDS Nordion's EBITDA margins would be negatively affected by
150-250 basis points. This change in cost will come into effect
when MAPLE is operational. MDS will focus on mitigating this impact
through increased volume, price and productivity improvements. The
terms of the existing NRU supply agreement will remain in effect
until commercial production of MAPLE isotopes begins. MDS's
carrying value of the MAPLE project, after adjustments and the $25
million payment from AECL, will be approximately $345 million. This
investment will be reclassified from a capital asset under
construction to an intangible asset, to reflect the exchange of
MDS's interest in the facility for the new supply agreement. This
amount will be amortized on a straight-line basis over a 40-year
period once commercial production of MAPLE isotopes begins. AECL
will also acquire $53 million of MAPLE-related inventories which
will be paid for over four years beginning in 2008. As a result of
these transactions, MDS will record an approximate $10 million
non-cash charge in the second quarter. In 2005, MDS capitalized
expenditures of $63 million related to the MAPLE project and prior
to entering into this agreement had expected to capitalize a
similar amount in 2006. MDS will have no further capital
expenditures related to the completion of the MAPLE project in 2006
and beyond. Interest charges related to MAPLE which were
historically capitalized, will be expensed beginning in the second
quarter at a rate of $2.5 million per quarter. Today, these
important medical isotopes are produced in the NRU reactor. AECL
has made significant investments to ensure the extended operation
of the NRU reactor and has applied for a five-year operating
license renewal with the objective of operating the NRU reactor
through to 2011. This reactor is expected to serve the needs of our
customers for medical isotopes until commercial production of MAPLE
isotopes begins. AECL is executing its plan to resolve technical
issues relating to the MAPLE reactor project in the 2006 to 2008
timeframe. This plan, successfully executed, will allow for full
production in advance of the decommissioning of the NRU reactor.
MDS Nordion is the leading provider of medical isotopes used for
molecular imaging procedures. Over 9 million procedures that rely
on MDS Nordion's products are performed annually around the world.
As well, MDS Nordion is a leading developer and manufacturer of
radiotherapeutics for more targeted treatments. MDS will be holding
a conference call today at 10:00 am EST. This call will be webcast
live at http://www.mdsinc.com/, and will also be available in
archived format at
http://www.mdsintl.com/news_events/webcasts_presentations.asp after
the call. MDS Inc. is a global life sciences company that provides
market-leading products and services that our customers need for
the development of drugs and the diagnosis and treatment of
disease. MDS is a global provider of pharmaceutical contract
research, medical isotopes for molecular imaging,
radiotherapeutics, and analytical instruments. MDS Forward Looking
Statement Certain statements in this press release are
forward-looking and subject to a variety of risks and
uncertainties. Some forward-looking statements may be identified by
words like "expects", "anticipates", "plans", "intends",
"indicates" or similar expressions. The statements are not a
guarantee of future performance and are inherently subject to risks
and uncertainties. The Company's actual results could differ
materially from those currently anticipated due to a number of
factors, including, but not limited to, successful integration of
structural changes, including restructuring plans, acquisitions,
technical or manufacturing or distribution issues, the competitive
environment for the Company's products, the degree of market
penetration of the Company's products, and other factors set forth
in reports and other documents filed by the Company with Canadian
and US securities regulatory authorities from time to time.
DATASOURCE: MDS Inc. CONTACT: Sharon Mathers, Vice-President,
Investor Relations, (416) 675-6777 ext. 2695,
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