Kaiser widens bankruptcy
KAISER Aluminium & Chemical Corporation yesterday placed into Chapter 11 bankruptcy the subsidiaries which control its interest in Jamaica as part of a move to widen its protection from creditors.
But Kaiser said that the filings with the US Bankruptcy Court in Delaware will not affect the operations of the Alpart alumina refinery in Nain, St Elizabeth, in which it has a 65 per cent stake, and Kaiser Jamaica Bauxite Company, in St Ann, in which its holding is 49 per cent.
“The move does not affect our day-to-day operations at all — at Alpart and Kaiser Jamaica Bauxite Company (KJBC),” said Gene Miller, who as general manager at Alpart, has responsibility for all Kaiser operations in Jamaica.
In a separate statement issued from its corporate headquarters in Houston, Texas, Kaiser had stressed that while the filings included the US vehicles through which it owned interests in the Jamaican operations, the Jamaican interests themselves “are not included in the filings and thus not subject to any bankruptcy-related impacts”.
The two companies of relevance to Jamaica which are now under Chapter 11 protection are Alpart Jamaica Inc, which partners the Norwegian firm Norsk Hydro in ownership of the Alpart alumina refinery and Kaiser Bauxite Company, the junior partner with the Jamaican government in the mining operations which Kaiser also manages.
They are part of nine entities that Kaiser placed into bankruptcy yesterday, joining most of its other major operations for which it sought protection 11 months ago.
At the time, Kaiser had sought protection from its creditors in the face of a cash shortage and its inability to access the debt market, which it blamed on a weak economy, depressed prices for its commodities and the potential cost of asbestos litigation against it. Chapter 11 bankruptcy would give the space within which to reorganise.
But yesterday’s filings were to protect the assets of the entities from which Chapter 11 cover has been sought, from a lien on their assets which could arise if Kaiser did make a US$15-million contribution by today to its salaried pension plan.
Kaiser had already indicated what it would not ask the bankruptcy court for approval to make the payment and a statutory lien on the entities would have disrupted Kaiser’s agreements with its creditors.
“From an operating perspective, the filings are a non-event,” said Kaiser’s president and CEO, Jack A Hockema.
“At the time of the original Chapter 11 filings last February it was not considered necessary to bring the nine entities now affected under bankruptcy cover. But in the current circumstance yesterday’s filing was deemed “an appropriate and prudent protective measure”.
Apart from the Jamaica and US operations, the filings also cover vehicles through which Kaiser controls its holdings in an aluminium extrusion plant in London, Ontario, which will require ancillary measures in the Canadian courts to prevent an impact on the plant.
“We want to be absolutely certain that customers, employees and suppliers understand that these filings will have no impact on the day-to-day operations of Alpart, KJBC and London,” Hockema said in the company’s statement. “In particular, the filings were not prompted by cash flow concerns, business conditions or balance sheet issues of any of the affected subsidiaries.”
In fact, in Jamaica, Alpart’s Miller commented that the company had made “some early payments” as a signal to suppliers that the operations were not in trouble.
Hockema stressed that Kaiser expected the bankruptcy court to give the greenlight to a request that those entities now under Chapter 11 “to continue to make payments in the normal course of business — including payments in pre-petition amounts — to creditors and others for items such as materials and supplies, freight, taxes and, of course, salaries, wages and benefits for employees”.
Approval was also expected for the continuation of inter-company transactions.
“In short, the filings simply represent yet another step on the path towards the company’s restricting and eventual emergence from Chapter 11,” Hockema said.