Ormet secures financing to restart Burnside, La., aluminum plant

By Toni Weeks

San Diego, May 16 - Ormet Corp. announced that it has entered into financing from three sources to restart its Burnside, La., aluminum refinery, which has been idle since 2006, when alumina prices tumbled and natural gas prices rose.

According to a press release, the company's revolver with Wells Fargo Capital Finance, LLC was increased to $60 million from $50 million. The revolver will mature on March 1, 2013 and is secured by a first lien on current assets and a second lien on all other assets, with interest at prime plus 50 basis points or Libor plus 275 bps.

In addition, the state of Louisiana has provided Ormet with a multifaceted assistance package, which could amount to $15.7 million over 10 years.

Ormet said it has also secured a new term loan for $30 million from a private investment fund managed by Wayzata Investment Partners. The Bank of New York Mellon Corp. will be the agent for the new term loan, which will be added on to the $110 million four-year term loan entered into March 1, 2010. The new term loan, which carries an interest rate of 14% and an original issue discount of 5%, is secured by a first lien on most of the land and all of the property, plant and equipment and a second lien on the balance of the assets.

The company will spend roughly $50 million to restart operations at Burnside and create 250 new jobs. The production of alumina at the refinery will allow Ormet to remain competitive by bringing its aluminum prices down.

"Burnside will improve our competitiveness in a worldwide market," Mike Tanchuk, chief executive officer, said in the release.

Ormet intends to produce alumina early in the fourth quarter of 2011 and will have a capacity of 540,000 metric tons per year.

The Hannibal, Ohio, company is a U.S. producer of aluminum.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.