Nordion Reaches Settlement With AECL To Resolve MAPLE Suits, Arbitration Costs

(RTTNews) - Nordion Inc. (NDZ, NDN.TO) announced that Nordion and Atomic Energy of Canada Limited or AECL have entered into a comprehensive settlement agreement to resolve the outstanding claims between both parties related to the MAPLE facilities.

Nordion has also announced that, effective immediately, the parties have entered into an amended and restated isotope supply agreement and a waste management services agreement.

As per the terms of the settlement agreement, Nordion will receive C$15 million in cash from AECL, and AECL has released its claim against Nordion of about C$47 million for arbitration costs. Nordion has correspondingly withdrawn its MAPLE-related lawsuit against AECL in relation to the Isotope Production Facilities Agreement or "IPFA" and the parties have released each other from claims relating to the IPFA and related litigation. The release of claims includes Nordion's claim for damages against AECL under the IPFA of about C$244 million and AECL's IPFA counterclaim for damages against Nordion of C$80 million.

The amended and restated isotope supply agreement is a non-exclusive agreement for medical isotope supply by AECL to Nordion, which has a term ending October 31, 2016.

The company noted that the supply agreement may also be terminated upon, Nordion establishing a satisfactory alternative supply of isotopes, the permanent shutdown of AECL's isotope production facilities, Nordion's failure to meet a minimum purchase quantity and any force majeure that continues for a period of more than two years.

The primary cost of supply of medical isotopes will continue to be determined based on a revenue share methodology. Starting in 2014, the percentage of revenue share that AECL receives each year will increase throughout the term of the supply agreement contributing to a mid single-digit decrease in Nordion's Medical Isotopes gross margin percentage over the course of the contract. In addition, Nordion has entered into an agreement to continue waste disposal services from AECL until October 31, 2026.