Aleris
International U.S. Operations File for Chapter 11 to
Address
Business and Financial Challenges
All
Facilities Open, Normal Operations Continue;
Aleris
Obtains $1.075 Billion DIP Financing Commitment from Bank Group
International
Operations Not Included in the Filing
BEACHWOOD, OH -- February 12, 2009
-- Aleris International, Inc., a global leader in aluminum rolled
products, extrusions and recycling, announced today that it and its wholly-owned
U.S. subsidiaries have filed petitions for voluntary reorganization under
Chapter 11 of the U.S. Bankruptcy Code as a result of financial constraints
related to deteriorating demand, earnings, and liquidity caused by the steep
decline in global economic conditions. The filing was made today in the
U.S. Bankruptcy Court in Delaware. The Company's European, Asian, South
American, Mexican and Canadian operations were not included in the
filing.
To fund
its global operations during the restructuring, Aleris has secured $1.075
billion of debtor-in possession (DIP) financing. Subject to court
approval, the DIP credit facilities include a new $500 million term loan and a
$575 million revolving credit facility that replaces the Company's previous
revolving credit facility. These will be used for the Company's normal operating
and working capital requirements, including employee wages and benefits,
supplier payments, and other operating expenses during the reorganization
process. The Company believes that the DIP credit facility provides
sufficient funds for its reorganization effort under Chapter 11.
“We have
moved aggressively to reduce our costs and eliminate capacity to offset the
negative effects of the global economic slowdown. However, given the
unpredictability of the speed and severity of the downturn over the last few
months, these actions were not sufficient to counter the combination of
challenges Aleris faces, including a sharp deterioration in demand for our
products by the automotive, housing, and general industrial products sectors and
an unprecedented decline in aluminum prices which limited our borrowing
ability,” said Steven J. Demetriou, Aleris Chairman and CEO. “After
careful deliberation with our advisors, the Company’s Board of Directors
concluded that seeking the protection of Chapter 11 for our U.S. operations is
the only option to preserve and maximize value for all of our economic
stakeholders. This should allow us the time to work through the current
dislocations and the opportunity to pursue a financial and operational
restructuring that creates a more competitive foundation for the long
term.
“While we
regret the need to take this difficult step, we believe a financial
recalibration is necessary for us to resume a path of growth and continue to
build a global aluminum enterprise that will endure.
“Aleris
is conducting business as usual across the Company,” continued Mr.
Demetriou. “Our customers can continue to have confidence that they
will receive their orders on time and as specified. Our suppliers can expect
timely payment in full for all goods and services provided from today forward.
Furthermore, we have petitioned the Court for customary first day orders, which
will ensure that our employees will be paid in full and on the normal schedule
and that our operations will function normally and without any
disruption.”
Further
Information
Aleris
reported total assets of approximately $4.9 billion and total liabilities of
approximately $4.2 billion, on a consolidated basis, as of September 30,
2008.
For
further information or assistance with claims, please call Aleris’s
Restructuring Information Line toll-free at (866) 927-7089.
About
Aleris
Aleris
International, Inc. is a global leader in aluminum rolled products and
extrusions, aluminum recycling and specification alloy production. Headquartered
in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and Asia, and
employs approximately 8,400 employees. For more information about Aleris, please
visit our Web site at www.Aleris.com.
Safe
Harbor Regarding Forward-Looking Statements
Forward-looking
statements made in this news release are made pursuant to the safe harbor
provision of the Private Securities Litigation Reform Act of 1995. These include
statements that contain words such as “believe,” “expect,” “anticipate,”
“intend,” “estimate,” “should” and similar expressions intended to connote
future events and circumstances, and include statements regarding future actual
and adjusted earnings; future improvements in margins, processing volumes and
pricing; overall 2008 operating performance; anticipated effective tax rates;
expected cost savings; success in integrating and anticipated synergies
resulting from Aleris’s recent acquisitions, including the acquisition of the
downstream aluminum businesses of Corus Group plc; its future growth; the
anticipated economic environment in 2008; and future benefits from acquisitions
and new products. Investors are cautioned that all forward-looking statements
involve risks and uncertainties, and that actual results could differ materially
from those described in the forward-looking statements. These risks and
uncertainties would include, without limitation, Aleris’s levels of indebtedness
and debt service obligations; its ability to effectively integrate the business
and operations of its acquisitions; further slowdowns in automotive production
in the U.S. and Europe; the financial condition of Aleris’s customers and future
bankruptcies and defaults by major customers; the availability at favorable cost
of aluminum scrap and other metal supplies that Aleris processes; the ability of
Aleris to enter into effective metals, natural gas and other commodity
derivatives; continued increases in natural gas and other fuel costs of Aleris;
a weakening in industrial demand resulting from a decline in U.S. or world
economic conditions, including any decline caused by terrorist activities or
other unanticipated events; future utilized capacity of Aleris's various
facilities; a continuation of building and construction customers and
distribution customers reducing their inventory levels and reducing the volume
of Aleris’s shipments; restrictions on and future levels and timing of capital
expenditures; retention of Aleris’s major customers; the timing and amounts of
collections; currency exchange fluctuations; future write-downs or impairment
charges which may be required because of the occurrence of some of the
uncertainties listed above; the difficult conditions in the capital, credit,
commodities, automobile and housing markets and in the current economy; and
other risks listed in Aleris's filings with the Securities and Exchange
Commission (the “SEC”), including but not limited to Aleris’s annual report on
Form 10-K for the fiscal year ended December 31, 2007, and quarterly report on
Form 10-Q for the quarter ended September 30, 2008, particularly the section
entitled "Risk Factors" contained therein.
U.S.
Media Contacts:
Kekst and
Company
Ruth
Pachman, 212-521-4891
David
Lilly, 212-521-4878
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