Noranda Aluminum hit by commodity crash, seeks bankruptcy (updated)

Noranda Aluminum Holding

08/02/2016 19:19

(Adds details on sales process, underfunded pensions, legal 
disputes and shares) 
    By Shivam Srivastava and Tracy Rucinski  
    Feb 8 (Reuters) - Noranda Aluminum Holding Corp  NORN.PK , 
which smelts and refines aluminum and mines bauxite, filed for 
bankruptcy on Monday and joined a growing list of 
commodity-related businesses in Chapter 11. 
    Over the past year scores of commodity-related businesses 
have filed for bankruptcy as prices for metals, energy and coal 
have plummeted amid a slowdown in markets such as China and 
Brazil. 
    Noranda is putting its profitable flat-rolled products 
business up for sale to raise cash and is winding down a key 
smelting plant in New Madrid, Missouri, where production will 
halt around March, court documents showed. 
    The Franklin, Tennessee-based company, whose competitors 
include Alcoa Inc  AA.N  and Kaiser Aluminum Corp  KALU.O , said 
challenging market conditions made business without court 
protection unsustainable. 
    "This is due to a number of factors, principal among them is 
the sustained and dramatic decline in the price of primary 
aluminum," Chief Financial Officer Dale Boyles said in a filing 
with the U.S. Bankruptcy Court of Eastern Missouri. 
    Noranda, with $530 million of secured debt, is seeking up to 
$130 million in debtor-in-possession (DIP) financing to help 
fund its business. It has already received commitments for about 
$35 million. 
    A failure to achieve adequate funding could force it to idle 
more facilities and liquidate on a piecemeal basis, CFO Boyles 
said. 
    The company, with 1,857 employees, also faces about $159 
million in underfunded pensions as of Dec. 31, 2015. It has four 
collective bargaining agreements with two unions that represent 
about 54 percent of its U.S. workforce. 
    It said it will continue to operate a St. Ann, Jamaica, 
plant for bauxite that is refined into aluminum in its Gramercy, 
Louisiana plant, which will also remain open. 
    However, Noranda is in dispute with a bankrupt subsidiary of 
Glencore  GLEN.L , Sherwin, over a supply contract at the 
Jamaica plant and is also in arbitration with the Jamaican 
government over an increased levy. 
    Noranda also owes another Glencore subsidiary nearly $17 
million for payments under a credit agreement at the same plant. 
    Noranda, once owned by private equity firm Apollo Management 
LP  APOLO.UL , made its stock market debut in 2010 and traded at 
more than $116 per share in 2011. The stock was recently 
delisted from the New York Stock Exchange and now trades on the 
pink sheets. It was last down 80 percent at 6.3 cents. 
    The case is in U.S. Bankruptcy Court, for the Eastern 
District of Missouri, Case No 16-10083. 
 
 (Reporting by Shivam Srivastava in Bengaluru and Tracy Rucinski 
in Chicago; Editing by Sunil Nair and Cynthia Osterman) 
 ((shivam.srivastava@thomsonreuters.com; within U.S. +1 646 223 
8780, outside U.S. +91 80 6749 6894; Reuters Messaging: 
shivam.srivastava.thomsreuters.com@reuters.net)) 
 
Keywords: NORANDAALUMINUM BANKRUPTCY/