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June 16, 2003
Monthly Update to Customers, Employees, Suppliers, and Friends of Kaiser Aluminum:
In Today’s Court Hearing
This month’s hearing was originally set for June 17 but was rescheduled for today at the request of the judge. The Court ruled favorably on a number of routine matters. In addition, in advance of the hearing, the Court also ruled favorably on a number of noteworthy items for which there were no objections from any stakeholders. In particular, the Court has:
- Approved the sale of specialized equipment at the Trentwood, Washington, plant (the five-stand cold mill) for net proceeds of approximately $5 million. This specialized mill was used primarily to produce aluminum sheet for the beverage can market. We decided to sell the equipment because we no longer make that product.
- Approved several motions related to what we have previously described as the “claims reconciliation process.” This process includes, for example, reclassifying certain creditor claims – basically matching them to the appropriate Kaiser entity. It also includes disallowing certain creditor claims, such as duplicates and those for which there is no basis for liability and/or no supporting documentation. These rulings were largely procedural, but were important nonetheless, as they demonstrate that this process is moving forward.
- Approved the extension of exclusivity through July 31, 2003. The company is likely to seek Court approval for additional extensions beyond that date.
- Approved two related motions (one of which was an amendment to our existing Credit Agreement) that together will have the effect of reducing the amount of cash that Kaiser would have otherwise been required to provide to the 20%-owned QAL alumina refinery in Australia. In essence, the Court approvals enable QAL to borrow under previously arranged financing facilities to fund near-term debt maturities and other cash requirements.
The next regularly scheduled hearing is set for July 28, 2003.
Liquidity Remains Solid
Kaiser's total liquidity continues to be approximately $200 million.
Encouraging Signs for Valco
Within the past several weeks, we have met twice with government officials in Ghana concerning the near-term and long-term power situation for the Valco aluminum smelter. Although the meetings have not produced definitive contractual agreements, we are encouraged by the tone of the discussions. However, we are continuing to pursue the previously announced arbitration process as a parallel path in the event that the current discussions do not lead to a satisfactory resolution of the issues
New Alumina Contract
Kaiser has entered into a new supply contract to continue to supply 100% of the alumina requirements of Century's Hawesville, Kentucky, Operations for the period from January 1, 2006 through December 31, 2008. We are pleased by this contract renewal and by the faith it shows in Kaiser and our Gramercy, Louisiana, refinery.
Three Preferred Supplier Awards
In an ongoing testament to the hard work our folks are doing, Kaiser’s Fabricated Products business has recently earned three “Best in Class” supplier awards:
- One of the world’s largest distributors of specialty tubular and bar products has recognized the Bellwood, Virginia, and Chandler, Arizona, plants.
- A major metals distributor – has recognized Bellwood for supply of soft alloy extrusions.
- A major producer for the automotive market has recognized our Greenwood, South Carolina, plant for supply of parts to its operations.
I want to thank customers, employees, suppliers, and others for your ongoing support. Our advisors continue to indicate that they believe Kaiser can emerge from Chapter 11 in 2004, and we are working very hard to accomplish exactly that.
Jack A. Hockema
President and Chief Executive Officer
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