Kaiser ponders asset sale
Company won't comment on speculation about Trentwood plant
John Stucke - Staff writer
Spokane _ Kaiser Aluminum Corp. may sell some of its assets to pay off debts, a move fueling speculation that at least one of its Spokane properties may be up for sale.
Corporate spokesman Scott Lamb said he had no comment on persistent rumors that Kaiser might sell its Trentwood rolling mill to Pechiney, a French aluminum company.
"We're not offering any comment or speculation on Pechiney or other companies," he said. "We do intend to repurchase some of our debt, and for us to do that we have to have this disclosure" to shareholders.
Pechiney's office in Chicago did not return a phone call Thursday.
Kaiser has about $958 million of long-term debt, Lamb said, adding, however, that the company hasn't publicly stated what a preferred debt load might be.
The company, which also operates the idled Mead smelter, is traded on the New York Stock Exchange but is majority owned by Maxxam Inc., a holding company controlled by financier Charles Hurwitz.
Across the globe, Kaiser has 22 major manufacturing plants, including 15 in the United States.
While Kaiser contemplates the sale of assets, the future of its Mead smelter may be in jeopardy.
The company shut the smelter in December and has been reselling its allotment of federal electricity from the Bonneville Power Administration.
The arrangement will net the company about $500 million through October, causing an outcry from BPA officials and Steelworkers, who were laid off from the smelter while Kaiser reaps a windfall.
Kaiser Vice President Pete Forsyth said the money is really a savings account that the company will have to drain to buy a much more expensive supply of power starting this fall.
BPA disagrees, and wants Kaiser to share the wealth.
"It's difficult to conceive of a circumstance that would prevent them from coming to terms with the regions's other ratepayers and their employees, given the amount of windfall profit," said BPA spokesman Ed Mosey.
If Kaiser doesn't reach an agreement with BPA on how the company should spend the proceeds, the federal agency could take punitive actions.
The most severe being discussed would be for BPA to withhold future power from Kaiser beginning in October.
Mosey said the agency has to go into the market to purchase power for Kaiser, which will cost BPA an extra $160 million. But if Kaiser and BPA fail to reach an agreement on the proceeds, Mosey said, BPA won't buy the power, effectively unplugging Kaiser from the federal supply. Under that scenario, Mosey said, Kaiser's new electricity supply contract would be an empty document.
If the contract supplying cheap, reliable federal power is worthless, Mosey said, that could affect the asset value of the smelter.
"One could ask what the value of the smelter is without a power-supply contract," he said.
Forsyth said BPA's demands are unreasonable.
Kaiser is preparing as best it can to keep the Mead smelter open. Part of the plan is trying to fashion an agreement with BPA that provides affordable or at least predictably priced electricity.
Kaiser won't sign a deal that just seeks to cut up the proceeds pie without ensuring long-term stability for the Mead smelter, Forsyth said.