Kaiser Aluminum & Chemical Corporation, a Houston, TX, U.S.-based producer of fabricated aluminum products, alumina, and primary aluminum, has signed an agreement to sell its 65-percent interest in Alpart, a partnership that owns bauxite mining operations and an alumina refinery in Jamaica, to Glencore AG.
Glencore AG is a subsidiary of Glencore International AG, a privately owned company organized under the laws of Switzerland. Net cash proceeds are expected, at a minimum, to be in the range of U.S. $160 million to $170 million, subject to certain closing and post-closing adjustments.
The transaction, which is subject to several closing conditions, includes the interests of Kaiser and certain of its subsidiaries in Alpart and also may include certain alumina sales contracts that are typically sourced from Kaiser's share of alumina production at Alpart. The purchase price could increase significantly depending on which contracts, if any, are ultimately included in the transaction.
Kaiser will be responsible for prepayment of its approximately $14-million share of Alpart's outstanding CARIFA loan, which becomes due in full upon consummation of the transaction.
The agreement also provides for Glencore to supply Kaiser with alumina of up to 200,000 metric tons in 2004 and up to 100,000 metric tons in 2005 at an agreed percentage of London Metal Exchange aluminum prices.
Kaiser expects that, at the minimum end of the expected range of proceeds, the transaction will result in a pre-tax book loss in the range of $50 million. The transaction is subject to approval by the U.S. Bankruptcy Court for the District of Delaware, where Kaiser plans to file a related motion and a copy of the agreement as promptly as practicable. Kaiser anticipates requesting the Court to rule on the motion during a regularly scheduled hearing on Feb. 23, 2004. The transaction is also conditioned upon approval by the lenders under Kaiser's Post-Petition Credit Agreement, as more fully discussed in the company's most recent Quarterly Report on Form 10-Q.
Subject to the satisfaction of these and certain other conditions, Kaiser expects the transaction to close late in the first quarter or early in the second quarter of 2004. Until the transaction is complete, Kaiser will retain management responsibility for Alpart and will involve appropriate Glencore personnel on transitional issues.
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