Aleris International, Inc., a global leader in aluminum rolled products, extrusions and recycling, announced today that it and its U.S. subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code as a result of financial constraints related to deteriorating demand, earnings, and liquidity.
European, Asian, South American, Mexican and Canadian operations of Aleris are specifically excluded from the filing. Aleris facilities across the globe will remain open and continue normal operations.
According to the company Aleris’s worldwide operations have been severely affected by an unprecedented combination of event in recent months, driven by the global economic situation. "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 aluminum prices which limited our borrowing ability," said Steven J. Demetriou, Aleris Chairman and CEO. "After careful deliberation with our advisors, the Company's Board of Directors concluded that seeking the protection of Chapter 11 for our U.S. 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."
"The European business development is equally challenging as in the U.S., but we have sufficient cash reserves," said Roeland Baan, President of Aleris Europe. "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 U.S. 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 reorganization process. As part of this agreement, a new financing facility of up to US$ 180 million will be made available specifically for Aleris Europe.
Source: Aleris International