PALM BEACH, Fla. Ormet Corp. is seeking court approval to sell its Burnside, La., alumina refinery to Almatis Inc. for $35.3 million.
The proposed deal excludes any assets primarily used in connection with Ormets idled Hannibal, Ohio, smelter, according to documents filed in U.S. Bankruptcy Court in Delaware.
The bankrupt Hannibal-based aluminum producer has requested a sale hearing on Nov. 5, with objections due by Nov. 4.
Leetsdale, Pa.-based Almatis supplies alumina to the refractory, ceramic and polishing industries, with operations in Leetsdale, Bauxite, Ark., Dalton, Ga., and Neville, Pa., as well as facilities in Brazil, China, Germany, India and the Netherlands.
Talks between Almatis and Ormet "accelerated" after a previous deal with another suitor fell apart when Ormet failed to gain necessary changes to its power deal for the Hannibal smelter (amm.com, Oct. 4).
"It is critical that the court approve the sale," Ormet said in court documents. The potential deal is the "highest and best value available," exceeds the liquidation value of the Burnside facility and, given mounting losses at the company, represents the "only chance" to save 213 jobs at the refinery.
Ormet said it was looking to sell the Burnside refinery as a going concern. The refinery, which can produce 540,000 tonnes of smelter-grade alumina at full capacity, has been on hot-idle status since Oct. 14, which should allow it to return to production quickly. In contrast, Ormets Hannibal smelter, capable of producing 270,000 tonnes of primary aluminum per year, is idle (amm.com, Oct. 18).
Ormets motion for approval to sell the Burnside facility to Almatis came as the U.S. Trustee objected to the companys wind-down plan, calling for its Chapter 11 bankruptcy reorganization case to be converted to a Chapter 7 liquidation.
U.S. Trustee Roberta DeAngelis blasted Ormet in bankruptcy court documents for seeking relief not contemplated in U.S. bankruptcy rules and presenting a "half-baked" Chapter 11 "scheme."
"There is no budget to support and finance (Ormets) wind-down procedures at this point, and it is unknown what, if any, administrative, priority or general unsecured claims, other than professional, will be paid," DeAngelis said. "Because a Chapter 11 plan does not appear to be a feasible option ... the creditors and other parties-in-interest appear to be better served by a conversion to Chapter 7."
The United Steelworkers union also objected to Ormets wind-down plan, noting that Ormetin a possible violation of collective bargaining rulesmailed letters to both active and inactive employees at the Hannibal smelter saying that the company could no longer pay for, among other things, health-care benefits, supplemental unemployment benefits and both short- and long-term disability benefits.