Parent company of Norandal USA files for bankruptcy
Published 12:00 am Tuesday, February 16, 2016
By Amanda Raymond
Noranda Aluminum Holding Corporation has filed for bankruptcy.
The company announced that it and all of its wholly owned direct and indirect subsidiaries have filed voluntary petitions for a court-supervised restructuring under Chapter 11 bankruptcy. The company filed on Feb. 8.
Norandal USA, one of the corporation’s plants, is located in Salisbury.
According to a news release on the company’s website, the company filed for bankruptcy in order to have more time and financial flexibility to evaluate options for its different business operations.
In the release, Kip Smith, company president and chief executive officer, said the aluminum market and recent disruptions in primary business operations have caused challenges for the company.
Noranda has also entered into an agreement in principle with its existing asset-based lenders for up to $130 million in debtor-in-possession (DIP) financing. Up to $35 million in incremental DIP financing has been committed to the company by certain existing term loan lenders.
The company hopes to use the bankruptcy process to stabilize its upstream operations. The upstream business is a vertically integrated producer of primary aluminum and consists of a bauxite mine, an alumina refinery and an aluminum smelter.
The company’s downstream flat-rolled products business manufactures aluminum foil and light gauge sheet. The news release stated the downstream business, including the Salisbury plant, is still benefiting from stable U.S. demand for its products and will operate and serve customers as it ordinarily does.
The news release stated that the downstream business “is likely to undergo a court-supervised auction process.”
According to Elaine Spalding, president of the Rowan County Chamber of Commerce, the Salisbury plant has anywhere from 150 to 200 employees.
According to a news release, the U.S. Bankruptcy Court granted the company interim approval of up to $165 million in new debtor-in-possession financing. The company will use the approved financing, as well as the cash that will come from the company’s ongoing operations, to support the business during the court-supervised process.
Noranda also received approval to keep paying employee wages, salaries and health and disability benefits. The company intends to pay its suppliers for goods and services provided on or after Feb. 8 in full under normal terms, the release stated.
Contact reporter Amanda Raymond at 704-797-4222.