NEW YORK (Reuters) – Aleris International Inc, producer of aluminum rolled products, extrusions and recycling, said on Thursday it filed for bankruptcy protection for its U.S. operations in U.S. Bankruptcy Court in Delaware.
The privately-held aluminum recycler said its international operations in Europe, Asia, South America, Mexico and Canada were not included in the voluntary reorganization filing under Chapter 11 of the U.S. Bankruptcy Code.
Aurora Acquisition Holdings Inc holds a 100 percent equity stake in Aleris. Aurora is 100 percent owned by TPG a huge private equity group.
The aluminum producer said it made the move because of financial constraints related to deteriorating demand, earnings, and liquidity caused by deteriorating global economic conditions.
Base metal prices and the global aluminum industry have been hit hard by the economic downturn, especially in the U.S. housing market and auto sales.
London Metal Exchange benchmark three-month aluminum prices MAL3 have tumbled off their July record high at $3,375 per tonne to Thursday’s close at $1,410 a tonne.
The severe and rapid price decline has forced aluminum producers around the world to shut operations that have been running below their cash costs.
To fund its global operations during the restructuring, Aleris said it secured $1.075 billion of debtor-in-possession (DIP) financing.
Subject to court approval, it said, 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.
The credit facility will be used for normal operating and working capital requirements, including employee wages and benefits, supplier payments, and other operating expenses during the company’s reorganization. (Reporting by Carole Vaporean)