Kaiser Aluminum plan of reorganization confirmed, expects to emerge by end of first quarter

By Caroline Salls

Pittsburgh, Feb. 6 - Kaiser Aluminum Corp.'s second amended plan of reorganization was confirmed Monday by the U.S. Bankruptcy Court for the District of Delaware.

According to a company news release, the U.S. District Court must affirm the confirmation before the company can emerge and the confirmation is also subject to appeal.

President and chief executive officer Jack Hockema said in the release that Kaiser plans to emerge from bankruptcy before the end of the first quarter.

The reorganization plan gives two employee trusts a majority of the new stock of the reorganized company. Unsecured creditors, including holders of the company's notes, will also receive stock for a 2.7% recovery.

The majority of the reorganized company's new stock will be distributed to two voluntary employee benefit associations that were created in 2004 for salaried and hourly retirees in connection with the cancellation of retiree medical plans.

The Union VEBA Trust for hourly employees will receive 11.44 million shares or 57.2% of the new stock in the reorganized company and cash equal to any contribution in the union plan.

The Retired Salaried Employee Trust will receive 1.94 million shares or 9.7% of the new stock.

In addition to the shares to be distributed under the plan, 2.22 million shares will be available to be issued under an equity incentive plan.

All pre-bankruptcy personal injury claims relating to asbestos, silica, coal tar pitch and hearing loss will be permanently resolved by the formation of trusts funded primarily by Kaiser's rights to proceeds from insurance policies.

Treatment of creditors under the plan will include:

• Holders of $5 million in secured claims will receive 100% recovery in cash;

• Holders of $616 million in Pension Benefit Guaranty Corp. claims against Kaiser's Canadian debtor will receive 6.6% recovery in 2.16 million shares of the new stock of the reorganized company and $2.5 million in cash.

The PBGC also will receive 1.08 million shares of new stock as holder of a general unsecured claim;

• Holders of $2.9 billion of general unsecured claims will receive 2.7% recovery in 4.46 million shares of the new stock.

Existing equity holders will receive nothing.

Kaiser expects to get $200 million in exit financing from JPMorgan Chase Bank. The exit facility will include a $60 million letter-of-credit facility, a $50 million term loan and a $17.5 million swingline loan.

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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