Joel R. Glucksman
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U.S. Aluminum Producer Files For Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Date: March 12, 2013
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U.S. aluminum producer Ormet Corporation is seeking protection under Chapter 11 bankruptcy law.
The company filed for protection in a U.S. Bankruptcy Court in Delaware. In court documents, it cited falling aluminum prices and growing operational costs as the reason for its financial distress. The company said it agreed to sell itself to investment firm Wayzata Investment Partners, and noted that the bankruptcy will allow it to restructure its debt and continue operations. Ormet has received roughly $90 million of debtor-in-possession financing. Nearly $60 million of the DIP financing will be provided by Wells Fargo, while the remaining $30 million will come from Wayzata.
Mike Tanchuk, CEO and president of Ormet Corporation, said the decision to sell Ormet to private investors will enable it to maintain its relationships with employees, suppliers, and clients while regaining its position of strength. He also noted that the financing will allow the company to pay its vendors in the ordinary course of business.
“The Chapter 11 filing will allow Ormet to accomplish two important goals,” Tanchuk explained. “First, to sell the company in a controlled process that is designed to ensure that the highest and best offer is received. Second, to restructure the debt and legacy costs while operations continue. We will come out of this process stronger and better positioned for the future.”
Court documents show that Ormet listed $407 million in assets and $417 in liabilities. In its bankruptcy filing, the company requested that it be allowed to continue paying its employees’ salaries, wages, and benefits. The company said that it will seek Bankruptcy Court approval of Wayzata’s bid to purchase Ormet’s assets. This process will provide that third-parties may seek to outbid Wayzata for the company.
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