United States – Aleris International, the global leader in aluminium rolled products, extrusions and recycling, has announced that that it and its US subsidiaries have filed voluntary petitions for reorganisation under Chapter 11 of the US Bankruptcy Code. It attributed the decision to financial constraints relating to deteriorating demand, earnings and liquidity caused by the steep decline in global economic conditions.
The European, Asian, South American, Mexican and Canadian operations of Aleris are specifically excluded from the filing. According to the company, Aleris facilities around the globe will remain open and continue normal operations.
According to a statement, Aleris operations have been severely affected by an unprecedented combination of events in recent months, driven by the global economic situation. Steven J. Demetriou, Chairman and CEO of the Ohio-based company, observes: ‘We have moved aggressively to reduce our costs and eliminate capacity to offset the negative effects of the global economic slowdown. However, given the unpredictability of the speed and severity of the downturn over the last few months, these actions were not sufficient to counter the combination of challenges Aleris faces, including a sharp deterioration in demand for our products by the automotive, housing and general industrial products sectors and an unprecedented decline in aluminium prices which limited our borrowing ability.’
And he continues: ‘€˜After careful deliberation with our advisors, the company’€™s board of directors concluded that seeking the protection of Chapter 11 for our US operations is the only meaningful option to preserve value for all of our constituents. This should allow us the time to work through the current dislocations and the opportunity to pursue a financial and operational restructuring that creates a more competitive foundation for the long term.’€™
Roeland Baan, President of Aleris Europe, says that issues facing the European business are ‘€˜equally challenging as in the US’€™ but that ‘€˜we have sufficient cash reserves’€™. He adds: ‘€˜Our customers can continue to have confidence that they will receive their orders on time and as specified. Our suppliers can expect payment as has been usual practice for all goods and services provided. Also, our employees will be fully paid and on the normal schedule. The filing will have no impact on our European employees.’€™
To fund its US operations during the restructuring, Aleris has secured commitments for a US$ 1.075 billion debtor-in possession (DIP) financing, subject to court approval. The DIP credit facility will be used for the company’€™s normal operating and working capital requirements and other operating expenses during the reorganisation process. As part of this agreement, a new financing facility of up to US$ 180 million will be made available specifically for Aleris Europe.