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Kaiser units' plan confirmation objections overruled; judge says indenture expected future senior debt
By Caroline Salls
Pittsburgh, Dec. 22 -Objections to confirmation of Kaiser Aluminum Corp. subsidiaries Alpart Jamaica, Inc., Kaiser Jamaica Corp., Kaiser Alumina Australia Corp. and Kaiser Finance Corp.'s plans of reorganization were overruled Thursday by the U.S. Bankruptcy Court for the District of Delaware.
Law Debenture Trust Co. of New York and Liverpool LP objected to the plans because of the subordination of 12¾% notes issued in 1993 by Kaiser subsidiary Kaiser Aluminum and Chemical Corp. to the company's 9 7/8% senior notes issued in 1994 and 10 7/8% senior notes issued in 1996.
The objections question what debt qualifies as senior to the 1993 notes under the notes indenture.
In her memorandum of opinion overruling the objection, judge Judith K. Fitzgerald said it was clear that the parties to the 1993 notes indenture all agreed that the 1993 notes could be subordinated to debt that did not exist yet.
"The purpose of the indenture was to subordinate all payments on the subordinated guarantees to any senior indebtedness of KACC or the subsidiary guarantors outstanding then or in the future," Fitzgerald said.
The judge also ruled that, although Law Debenture Trust contended that the indenture only subordinates the notes to "borrowed debt," there is no merit to that argument.
In addition, Law Debenture Trust argued that the indenture was too vague.
Fitzgerald disagreed, saying in her ruling that the court admitted the indenture, as well as declarations in support of it, and trading has been going on for the past 10 years based on the company's interpretation of the indenture.
The plans were confirmed on Tuesday, but the objections were preserved.
Kaiser, a Houston-based aluminum company, filed for bankruptcy on Feb. 12, 2002. Its Chapter 11 case number is 02-10429.
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