Lender forbearance exposes fresh risk in Energy Fuels' VAC acquisition

Customer dispute reshapes the VAC transaction

Energy Fuels Inc. (ASX:EF2, NYSE American:UUUU, TSX:EFR) has amended its proposed acquisition of VAC to address a dispute that now sits at the centre of the $1.8 billion transaction. The dispute concerns a commercial supply agreement tied to VAC’s e-VAC Magnetics subsidiary, which operates the new permanent-magnet facility in Sumter, South Carolina.

The customer gave notice purporting to terminate the agreement on July 1, 2026. e-VAC responded by commencing arbitration on July 7, seeking a declaration that the termination was wrongful and payment of amounts allegedly due for the remaining life of the contract. The filing says the outcome, including any settlement amount and its timing, remains uncertain.

The September 24 forbearance agreement adds another layer of pressure. e-VAC and its lending syndicate agreed that lenders would refrain from exercising remedies over specified events of default during the forbearance period, although the agreement does not extend the loan’s maturity or reduce the outstanding principal. Energy Fuels says the arrangement did not require the VAC borrowings to be classified as current at June 30, but the disclosure makes clear that the customer dispute has become a financing issue as well as a commercial one.

VAC brings revenue growth but remains loss-making

VAC’s interim numbers give shareholders a more candid view of the business Energy Fuels is seeking to acquire. Revenue rose 34.8% to €211.5 million in the six months ended June 30, 2026, helped by the start of commercial operations at the Sumter facility and stronger permanent-magnet sales. Gross profit swung to €16.8 million from a €8.9 million gross loss a year earlier.

That improvement did not reach the bottom line. VAC reported an operating loss of €34.5 million and a net loss of €57.4 million, compared with a €44.8 million loss in the prior corresponding period. Administrative expenses more than tripled to €35.2 million, largely because of legal, audit, accounting and transaction-related costs, while finance expenses remained heavy at €34.3 million.

At June 30, VAC had €43.7 million of cash and €25.8 million of undrawn revolving facilities, giving reported liquidity of €69.5 million. It also carried roughly €459.5 million of interest-bearing borrowings before considering the related-party loan and other adjustments. The group said it remained compliant with its financial covenants, but its going-concern assessment relied on shareholder loans, letters of comfort and downside scenarios that included possible termination of the customer agreement.

Purchase price and debt mechanics remain provisional

The amendment creates a mechanism for repaying specified VAC debt at closing and adjusting the transaction economics for any loss in value associated with the customer agreement or debt repayment. The filing’s preliminary pro forma model assumes $718 million of cash consideration, 65.853 million Energy Fuels shares and up to $135 million of preferred shares, alongside repayment of about $186 million of VAC debt subject to change-of-control provisions. A proposed $250 million senior secured term loan is intended to help fund debt repayment.

Those figures are not yet the final bill. Energy Fuels describes the pro forma purchase consideration as approximately $1.786 billion using a September 25 share price, while other sections refer to approximately $1.8 billion or $1.9 billion under different assumptions. The company also warns that the purchase price allocation, goodwill, preferred-share treatment and financing arrangements remain preliminary. Its model currently assigns $953.0 million of goodwill to VAC, a number that could change materially when the transaction accounting is finalised.

ASM integration creates the strategic upside

The proposed deal is designed to complete Energy Fuels’ mine-to-magnet chain, linking its White Mesa rare-earth separation operations with ASM’s Korean Metals Plant and VAC’s magnet facilities. That strategy gained a physical foothold through the ASM acquisition, which added a 1,300-tonne NdFeB alloy-making facility and the Dubbo project to Energy Fuels’ portfolio.

The filing says the Korean plant is being expanded towards 3,600 tonnes per annum of NdFeB alloy capacity, while the proposed American Metals Plant could initially produce 2,000 tonnes per annum. VAC would add permanent magnets and soft-magnetic materials across facilities in Germany, the United States, Finland, Slovakia, Malaysia and China. The industrial logic is substantial, but the proposed platform still depends on permitting, financing, feedstock supply, customer contracts and successful integration across several jurisdictions.

Energy Fuels also disclosed that Chief Legal Officer and Executive Vice President, Global Government Relations Nathan Longenecker plans to leave after a transition period expected to end by December 15, 2026. That is a secondary disclosure beside the transaction risk, but it arrives as the company manages arbitration, lender negotiations, regulatory approvals and a complex cross-border integration.