CHICAGO Bidding procedures for bankrupt Ormet Corp. have been approved, according to documents filed in U.S. Bankruptcy Court in Delaware.
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 forward (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 bankruptcy proceedings.
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 indicate.
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 bankruptcy protection.
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.