Aluminum producer Ormet files for bankruptcy, to sell business
Feb 25 (Reuters) - U.S. aluminum producer Ormet Corp has filed for Chapter 11 bankruptcy protection, hurt by low aluminium prices and high power costs, and agreed to sell its business to investment firm Wayzata Investment Partners, court documents showed.
Ormet has received about $90 million of debtor-in-possession (DIP) financing, $30 million from Wayzata and $60 million from Wells Fargo, the company said late on Monday.
"Ormet has done everything possible during very difficult financial times to pay its debt and legacy obligations. However, with a low metal price and higher power costs, we no longer have the financial liquidity to continue to do this," Ormet Chief Executive Mike Tanchuk said in a statement.
Ormet listed total liabilities of $416 million and assets of $406.8 million, according to a court filing.
The company said the bankruptcy filing will help it restructure its debt and slash costs while continuing its operations.
Ormet will solicit competing bids from other potential purchasers in accordance with a sale process to be approved by the bankruptcy court.
The company said the purchase price is not expected to provide sufficient recovery to the company's shareholders.
Ormet shares last traded at $0.45, giving the company a market capitalisation of about $8.4 million.
The case is Ormet Corp, Case No. 13-10334, U.S. Bankruptcy Court, District of Delaware.