Kaiser Aluminum Sees $110M-$135M In 2001 Asbestos Costs
WASHINGTON (Dow Jones)--Kaiser Aluminum & Chemical Corp., a wholly owned subsidiary of Kaiser Aluminum Corp. (KLU), estimates annual payments for asbestos-related costs will be $110 million to $135 million each in 2001 and 2002.
Kaiser Aluminum & Chemical estimates payments of $45 million to $50 million each in 2003 and 2004, about $25 million in 2005, and $125 million beyond 2005, it said in its annual report for 2000.
The report was filed Friday with the Securities and Exchange Commission.
The Houston company paid about $99.5 million for asbestos-related settlements and defense costs in 2000, while it received partial insurance reimbursements for asbestos-related matters of about $62.8 million.
The company said it will recover a substantial portion of asbestos payments from insurance, although insurance reimbursements have historically lagged the company's payments. Delays in receiving insurance repayments would hurt the company's liquidity, the filing states.
The company's Dec. 31, 2000, balance sheet includes a liability for estimated asbestos-related costs of $492.4 million, and a long-term receivable for estimated insurance recoveries of $406.3 million.
Kaiser Aluminum & Chemical also has received approval from its credit line lenders to repurchase up to $50 million in 9.88% senior notes.
The company's credit agreement expires in August, and in order for it to be extended on a short-term basis, the company needs to reduce from $225 million the amount of its outstanding 9.88% senior notes. As of Feb. 28 it had bought about $1 million of the notes.
Kaiser expects to receive about $130 million in proceeds related to 2001 power sales at or near March 30. An additional $130 million is expected to be received periodically through October. The sales are a result of the current high market prices for power in the Pacific Northwest.
The high prices prompted the company to temporarily curtail primary aluminum production at its Tacoma and Mead, Wash., smelters during the second half of 2000 and sell a portion of the power it had under contract through Sept. 30, 2001.
If the high price of power makes it unable to operate the smelters, the company would be liable for severance and supplemental unemployment benefits for laid-off workers, which could be significant and hurt its operating results and liquidity.
Kaiser Aluminum produces and supplies aluminum products used in the automotive, aircraft, defense and manufacturing industries.