Ormet gets reprieve on power supply, seeks OK of financing amendments

By Jim Witters

Wilmington, Del., Oct. 31 - Ormet Corp. received relief from a threatened power interruption at its Ohio facilities when the Public Utilities Commission of Ohio ruled on Oct. 30 that AEP Ohio must continue to provide power for the duration of Ormet's bankruptcy proceedings.

AEP had set a Nov. 1 deadline for the payment of $1.2 million. The power company said it was going to shut down power to Ormet's Hannibal plant and its Burnside refinery if the payment was not made.

Meanwhile, Ormet filed motions with the U.S. Bankruptcy Court for the District of Delaware seeking approval of amendments to its debtor-in-possession financing facilities that would provide $20 million of additional liquidity.

The emergency actions were necessary after the PUCO declined to reduce Ormet's power rates to $45.49 per megawatt hour from $60.

That ruling killed a planned $130 million sale of the Hannibal plant to Smelter Acquisition LLC.

When the sale fell through, Ormet defaulted on its DIP financing agreements.

Power supply

The company needs power to continue remediation processes required by the U.S. Environmental Protection Agency and to maintain its Burnside refinery in "hot idle" status pending a sale.

As previously reported, Almatis, Inc. has agreed to buy Ormet's Burnside refinery for about $39.4 million.

On Oct. 28, bankruptcy judge Mary F. Walrath denied Ormet's request for a temporary injunction against AEP to keep its power on.

Ormet sought emergency relief from the PUCO.

In its Oct. 30 ruling, the PUCO found Ormet's request "is reasonable and should be granted."

"Complying with the US EPA's consent decree and operating Ormet's sewage treatment and gas heating systems, is a reasonable means to protect the public from the potential environmental harm that may result from Ormet'sdisconnection," the PUCO ruling stated.

Ormet must pay for service weekly in advance.

"The relief granted to Ormet by the commission is likewise subject to modification or revocation by order of the bankruptcy court," the ruling stated.

DIP amendments

To fund the ongoing bankruptcy case and wind down operations, Ormet is seeking approval of amendments to its term loan and revolver under its DIP financing agreements.

The proposed amendments would provide an additional $10 million under the term loan, bringing the total facility to $35 million, and an additional $10 million of availability under the revolving loan, increasing the total facility to $50 million.

A hearing on the DIP amendments is scheduled for 10:30 a.m. ET on Nov. 7.

Ormet, a Hannibal, Ohio-based producer of aluminum, filed for bankruptcy on Feb. 26, 2013 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 13-10334.

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