Tennessee’s Noranda Aluminum Holding Corporation (Noranda) announced today in a press release that it has filed a petition for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Missouri in St. Louis. Noranda said it has taken this step to give itself “additional time and financial flexibility to evaluate options for its various business operations.”
Alongside the Chapter 11 filing, Noranda inked an agreement in principle with its current asset-based lenders for up to US$130 million in debtor-in-possession (“DIP”) financing. The firm has already received a financial commitment for up to US$35 million in incremental DIP financing. This financing is to be provided by some of Noranda’s existing term loan lenders.
The new financing is to be used to continue the firm’s business during the court-supervised Chapter 11 restructuring process. This financing will be combined with income generated from Noranda’s ongoing operations.
Noranda’s President and Chief Executive Officer Layle K. “Kip” Smith said, “In light of the challenging market conditions for the aluminum industry and the recent disruptions in our primary business operations, the Board and management team, with the support of our principal lenders, determined that undertaking this court-supervised process is in the best interests of Noranda and its stakeholders. We believe this court-supervised process will provide us with time and financial flexibility to evaluate options to enhance the sustainability of our major business operations.”
Noranda said that it will keep open the St. Ann, Jamaica, bauxite refinery open, as well as the Gramercy, Louisiana plant. It will continue to wind down production at its New Madrid, Missouri plant.
“This is due to a number of factors, principal among them is the sustained and dramatic decline in the price of primary aluminum,” Dale Boyles, Chief Financial Officer Dale Boyles said in a filing made with the district court.
The Noranda bankruptcy action is Case No 16-10083.