CHICAGO Ormet Corp. is considering liquidating its Hannibal, Ohio, smelter while it looks to make a deal with a potential buyer for its Burnside, La., alumina refinery.
The bankrupt aluminum producer said it hopes a sale of the Burnside refinery will allow the operation to continue as a "going concern," but it has "no option but to pursue a liquidation of assets at the Hannibal smelter," according to documents filed in U.S. Bankruptcy Court in Delaware.
Ormet did not respond to a request for comment.
A United Steelworkers union staff representative said that liquidation at Hannibal was not a foregone conclusion, noting that it was standard practice in bankruptcy proceedings to prepare for liquidation if it becomes necessary.
"All that is is a plan to liquidate," John Puskar, a staff representative for USW District 1, told AMM Oct. 18, adding that, to his knowledge, Ormet has made no decision to liquidate and that it was premature to jump to any conclusions. "They have a skeleton crew down there. Theyre doing their normal maintenance. ... Its day by day," he said.
Hannibal-based Ormet previously said it was seeking court approval to sell "excess assets" to repay creditors, including raw materials such as alumina, anodes, caustic soda and bauxite as well as finished goods, excess equipment, office furniture, fixtures, vehicles and property (amm.com, Oct. 16).
The company is examining "all options" for the Hannibal smelter, "including inviting certain parties that are known to have an interest in the liquidation of assets similar to what may be found at the Hannibal facility to perform diligence," according to court documents. Ormet also is exploring whether stalking-horse bidder Smelter Acquisition LLC might be amenable to changing its agreement with the company. Resolving the situation at Hannibal "may take several weeks," Ormet said in the court documents.
The proposed sale to Smelter Acquisition fell apart after Ormet failed to win approval for a lower fixed power rate or to gain permission to break its agreement with American Electric Power Co., Columbus, Ohio, so that it could buy electricity on the open market in 2014 (amm.com, Oct. 4).
At Burnside, Ormet said in court documents it is in discussions with a potential purchaser that might want to keep the operation as a going concern, and the facility is therefore on "hot idle" so that it could "quickly be brought back up to operational status."
Ormet hopes that a sale of the Burnside refinery will occur "in a compressed timeframe," but it is prepared for all contingencies and could curtail operations at Burnside at any time, court documents said.
Ormets Hannibal smelter, which is capable of producing 270,000 tonnes of primary aluminum per year when operating at full capacity, has been idled since Oct. 7, while the Burnside refinery, which can produce 540,000 tonnes of smelter-grade alumina at full capacity, has been on hot-idle status since Oct. 14.
Ormet had more than 1,100 employees at the two facilities when it filed for bankruptcy protection in February (amm.com, Feb. 26), court documents said. The company now has 99 workers at Hannibal and 213 at Burnside.