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Spokane, Washington  Est. May 19, 1883
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Kaiser files bankruptcy reorganization plan

Kaiser Aluminum filed its bankruptcy reorganization plan Wednesday, a 3½-year effort that would wipe away debts and render its common stock worthless, but would salvage key parts of the once-proud company to keep hundreds of people employed in Spokane.

Anticipated for many months, the plan calls for Kaiser to climb out of bankruptcy and conduct business with a fresh balance sheet and new labor agreements.

Though the plan needs approval from creditors and the Bankruptcy Court, Kaiser has collected support for its reorganization from creditors’ committees.

Chief Executive Officer Jack Hockema anticipates Kaiser could emerge from bankruptcy during the fourth quarter of 2005.

“We are now well on our way to completing our goal of emerging with a solid financial position,” Hockema said in a press release.

The reorganization plan includes several key provisions for its thousands of retirees and union workers, including majority ownership of new common stock that will be issued upon plan confirmation.

A new trust established for the company’s union work force would own more than 11.4 million shares of the new stock – 57 percent of all shares worth an estimated $200 million – plus cash.

Retirees, who lost medical insurance coverage and now receive a pension check from the federal Pension Benefit Guaranty Association (PBGC), will be the beneficiary of a trust holding 1.9 million shares of common stock – or about 9.7 percent of the stock worth an estimated $33 million – plus cash.

The trusts may receive additional money depending on the company’s success.

The other significant new stockholders would be the PBGC (16.2 percent of the shares), and a trust established for those with asbestos-related illnesses (6 percent of shares.)

Kaiser filed for bankruptcy protection in February 2002 under crippling debts of $3.1 billion. It listed assets of $3.3 billion, though that number later proved to be overvalued during a time of major economic shifts and the collapse of aluminum plants in the Pacific Northwest.

A dominant corporate presence in Spokane for decades, Kaiser once employed upwards of 4,000 workers, its paychecks underwriting numerous businesses, charities and community events.

Kaiser paid among the highest blue-collar wages in the region – enough for families to own homes, drive decent cars and save money for their children’s‘ education. The benefits included pensions and decent medical insurance coverage. In short, Kaiser was among the most significant underpinnings of Spokane’s economy.

But when the company and Steelworkers engaged in the bitter labor dispute beginning in 1998, Kaiser’s influence began to dissipate.

Resolution of a strike and lockout was met by an electricity crisis than closed Kaiser’s Mead smelter. It never reopened and was sold last year to a scrap company.

Following the terrorist attacks of Sept. 11, 2001, the company’s financial picture worsened. Aluminum sales and prices slumped, putting the company in danger of defaulting on its debts.

Executives decided to seek Chapter 11 federal bankruptcy protection, which allows a business to continue operations and restructure its debts.

Kaiser has gone from a firm with 5,800 employees to about 2,000 today. Though it once owned bauxite mines, alumina refineries and smelters around the world, it is now primarily focused on making aluminum products rather than commodities. It will continue to own a 49 percent stake in an aluminum smelter in Wales.

Kaiser’s Trentwood rolling mill continues to be a bright spot for the company.

With more than 650 employees and new contracts in place, the massive Spokane Valley factory is central to the success of a restructured Kaiser.

Trentwood provides aluminum sheet to aircraft makers, recently landing an important six-year contract with Airbus.

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