procedures for bankrupt Ormet Corp. have been approved,
according to documents filed in U.S. Bankruptcy Court in
Loan agreements with private
equity firm Wayzata Investment Partners LLC, Wayzata, Minn.,
and Wells Fargo Capital Finance LLC, Santa Monica, Calif., also
were given the go-ahead, according to documents signed by Judge
Mary F. Walrath.
Ormet has received $90 million
in debtor-in-possession (DIP) financing, including $30 million
in term financing from prospective buyer Wayzata Investment and
a $60-million facility from Wells Fargo (
amm.com, Feb. 26).
Ormets unsecured creditors
had argued that proposed bidding procedures for the Hannibal,
Ohio-based aluminum producer would unfairly benefit Wayzata
Investment and could discourage other bidders from coming
amm.com, March 19).
Ormet had struggled to find
companies interested in buying the primary aluminum producer
before it filed for bankruptcy protection (
amm.com, March 1).
The judge noted that Ormet had
been unable to find credit on more favorable terms. She also
said its lenders could make a credit bid for the company,
something unsecured creditors had also objected to.
Smelter Acquisition LLC, a
Wayzata entity, is serving as the stalking-horse bidder in the
The judge said that an auction
for Ormet will be conducted on May 13, with a hearing on the
approval of any sale slated for May 15. If no qualifying bids
are received except that from Smelter Acquisitions, no auction
will be held and the stalking horse can instead seek approval
to acquire the company, she said.
Objections to the sale must be
filed on or before May 8, according to court documents.
Also upheld were Ormets
agreements with Glencore International Plc for aluminum sows or
other finished goods, according to court documents. Any
material deemed to be Baar, Switzerland-based Glencores
inventory does not, under most conditions, constitute property
of Ormet and will not serve as loan collateral, the documents
Ormet reported assets of $406.8
million and total liabilities of $416 million, according to its
Chapter 11 bankruptcy protection filing. High legacy and power
costs and low aluminum prices pushed the company into seeking
Ormets smelter in Hannibal
can produce up to 270,000 tons of primary aluminum per year
when operating at full capacity, and its alumina refinery in
Burnside, La., can produce 540,000 tons of smelter-grade
alumina per year, according to court documents.