Aleris International files plan of reorganization under Chapter 11
1:28 pm, February 5, 2010
Aleris International Inc., an aluminum recycler and a producer of aluminum products, finally has filed a plan of reorganization under Chapter 11 of the Bankruptcy Code. The Beachwood-based company, which is a portfolio company of private investment firm TPG and entered Chapter 11 a year ago, said the reorganization plan “has substantial support from Aleris's creditors,” as shown by an equity commitment agreement with certain investment funds managed by Oaktree Capital Management L.P., affiliates of Apollo Management L.P. and Sankaty Advisors LLC. Aleris said those parties have committed to backstop a rights offering of equity and debt totaling as much as $690 million. Proceeds of the rights offering would be used to provide Aleris with working capital and to fund payments under the reorganization plan.
"The filing of the plan of reorganization with this level of creditor support represents a major milestone in our ongoing efforts to position Aleris to emerge from Chapter 11 with financial stability and an operationally sound and competitive foundation for the long term," Steven J. Demetriou, Aleris chairman and CEO, said in a statement.
“Since our (Chapter 11) filing last February, we have made significant improvements to our operations worldwide, reducing overhead, manufacturing costs and global headcount, as well as achieving significant productivity and customer service improvements,” Mr. Demetriou said. “When Aleris emerges from Chapter 11, we will have eliminated all of our term loan and unsecured debt and will have a strong balance sheet, significantly reduced operating costs and greater financial flexibility."
Aleris noted that the reorganized company would emerge from Chapter 11 as a privately held enterprise majority owned by existing creditors led by the parties that have committed to backstop the rights offering. They are the largest providers of the company's debtor-in-possession term loan financing.
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