November 18, 2004 in Business

Kaiser bankruptcy reorganization moves along

By The Spokesman-Review
 

Several Kaiser Aluminum Corp. subsidiaries plan to pay creditors as the company moves into the next phase of its bankruptcy reorganization, the company said this week.

One subsidiary owned a 20 percent stake in a refinery in Queensland, Australia. The refinery once supplied alumina to former company smelters in Mead and Tacoma.

Kaiser struck an agreement to sell its share in the Australian refinery to the growing Russian aluminum company RUSAL for $401 million in cash early next year. The deal also calls for RUSAL to assume $60 million of Kaiser debt.

Kaiser filed a liquidation plan in US Bankruptcy Court for the two subsidiaries, Kaiser Alumina Australia Corp. and Kaiser Finance Corp.

If approved by the federal judge overseeing the company’s Chapter 11 restructuring, money from the sale will be held in a liquidation trust, then later dispensed to creditors of those subsidiaries, including lenders holding notes totaling more than $211 million. Another large creditor of the subsidiaries is the federal Pension Benefit Guaranty Corp., with a claim of more than $106 million.

The other subsidiaries that have filed liquidation plans are Alpart Jamaica Inc. and Kaiser Jamaica Corp.

The two subsidiaries will have about $278 million in cash to repay their creditors after selling bauxite mining and alumina refining operations in the Caribbean nation last summer.

Similar to the liquidation of Kaiser’s Australian company, money will be placed into a liquidation trust, doled out and then the subsidiaries will be dissolved.

According to the liquidation plan for Kaiser’s Jamaican subsidiaries, the top recipients would be noteholders ready to collect more than $162 million, and the PBGC, which is in line for more than $82 million.

In court filings, Kaiser said the liquidation plans had the blessing of the company’s board of directors and committee of unsecured creditors.

The liquidations will not affect Kaiser’s American operations. They also won’t provide money to bolster a new set of health and retirement plans designed to ease the bankruptcy’s devastating effect on thousands of Steelworkers and retirees.

Money to support those efforts will come from the sale of other assets and Kaiser’s potential success as a reorganized company.

When the bankruptcy is finalized, Kaiser will look far different than the vertically integrated company that turned ore into airplane parts.

Kaiser’s global operations had workers mining bauxite, refining alumina, smelting aluminum, rolling high-quality metal for airplanes, turning out aluminum for beer cans and fabricating specialty construction parts.

The company plans to mostly exit the commodity end of the business and instead focus on fabricating parts.

It sold the Mead smelter earlier this year, for example, but intends to keep its Trentwood rolling mill as part of its core operations.


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