Ormet Corp. (ORMT), the operator of an Ohio aluminum smelter, filed for bankruptcy and said it agreed to sell itself to a group of private investment funds, seven years after emerging from a previous bankruptcy.
Ormet, based in Hannibal, Ohio, listed assets of $407 million in the Chapter 11 filing in bankruptcy court in Wilmington, Delaware, and liabilities of $416 million.
The company’s debt and legacy costs have been obstacles to achieving profitability, Chief Executive Officer Mike Tanchuk said in a statement posted on the company’s website. The Ormet pension plan is listed as the company’s biggest creditor, with a claim of $143 million. The shares fell 90 percent to close at 5 cents in New York.
The filing lets Ormet “sell the company in a controlled process,” Tanchuk said. “We will come out of this process stronger and better positioned for the future.”
Private investment funds managed by Wayzata Investment Partners LLC agreed to provide $30 million in debtor-in- possession financing, with Wells Fargo & Co. (WFC) providing a $60 million loan, Ormet said. Wayzata agreed to buy Ormet’s assets and will submit an opening bid in a stalking horse process in bankruptcy court, Ormet said.
Ormet has the capacity to produce 270,000 tons of aluminum a year, it said in an October filing. About 82 percent of its output for 2013 through March 2015 is tied to sales agreements with commodity trader customers including Glencore International Plc (GLEN), Ormet said in the filing.
In August, the company curtailed two of the six potlines at its sole smelter in Hannibal.
The case is In re: Ormet Corp., 13-103334, U.S, Bankruptcy Court District of Delaware (Wilmington).
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