Aleris Wins $1 Billion in Bankruptcy Financing

NEW YORK (Reuters) – Aleris International Inc [TXPACA.UL] will get court approval for more than $1 billion in bankruptcy financing to keep the maker of aluminum rolled products operating as it restructures its debt, sources said on Tuesday.

A lender group led by Deutsche Bank AG (DBKGn.DE) will provide about $500 million of fresh financing, which will be rolled together with a previous $575 million in credit to create the loan, according to sources with knowledge of the case.

The court order approving the money, known as debtor-in-possession (DIP) financing, is expected on Wednesday as lawyers have been finalizing the wording of the deal, said the sources, who asked not to be name because they were not authorized to speak to the media.

The bankruptcy court had provided interim approval for the loan, but several of the company’s creditors had objected to final approval of the loan.

J Aron & Co, the commodities unit of Goldman Sachs Group Inc (GS.N), said in a court filing that Deutsche Bank had hurt claims it holds on Aleris’ assets as it arranged the loan.

Private equity firm TPG [TPG.UL], which in 2006 bought Aleris for about $1.7 billion plus around $1.6 billion in debt, had also lodged an objection to the loan.

Lenders creating the loan were allowed to “roll up” portions of pre-bankruptcy loans into the revolving credit facility after providing new money into the DIP loan. The lenders who agreed to the roll-up were allowed to accelerate the priority of those pre-bankruptcy loans through the roll-up, ensuring they would be likely to get repaid before other lenders and creditors who did not partake in the roll-up.

Aleris filed for bankruptcy protection in Delaware on Feb. 12. The company has been hard hit by the sharp drop in demand for cars.

The case is In re: Aleris International Inc, U.S. Bankruptcy Court, District of Delaware, No. 09-10478. (Reporting by Tom Hals)