Canadian Nordion loses three year dispute with Atomic Energy
Shares of nuclear medicine company Nordion Inc. (TSX:NDN) (NYSE:NDZ) dove 40%, down $3.93 at $6.53 on Monday, after the Ottawa-based firm lost a long-lasting dispute with Atomic Energy of Canada Ltd (AECL).
The medical isotopes provider said Monday it has suspended its quarterly dividend and stop buying back shares on its stock buyback plan, after an arbitration panel rejected its claim for damages from AECL.
Nordion wanted the state-owned atomic energy firm to pay damages for mothballed reactors that were supposed to replace the ageing National Research Universal (NRU) reactor.
The NRU is one of the scarce reactors that produces the material Nordion needs to generate molybdenum-99. The Canadian company is one of the world's leading producers of that element, which is used in medical imaging.
The reactors that AECL was building never worked as they should have, which forced the institution to stop their production. The stoppage left Nordion with the timeworn NRU, which was shut down for extensive repairs by the Canadian government on two separate occasions: in 2007 and again from May 2009 to August 2010.
As a consequence, there was a shortage of moly-99 that pushed several Nordion's customers to look for other suppliers of the radioactive substance, used in the diagnosis and treatment of cancer and other diseases.
The unavailability of moly-99 also caused political uproar and raised concerns by doctors and other health professionals about the availability of medical tests for Canadians.
In March this year Nordion was target of criticism at a major nuclear security summit in South Korea due to the company’s deal with Russia that entitles it to sell medical isotopes made with weapons-grade uranium for the next eight years.
Canada does not have nuclear weapons, which means it does not enrich uranium. Nordion regularly imports enriched uranium from the U.S.
Image: A medical isotope production team at Nordion's molybdenum-99 processing facility near Ottawa. (Courtesy of Nordion)