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July 24, 2003
An Open Letter to Customers, Suppliers, and Friends of Kaiser Aluminum:
You may have read or heard about news that Kaiser Aluminum has begun the process of dealing with certain retiree benefits within the context of our bankruptcy restructuring.
I want to assure you that any steps in this area would be taken for one reason and one reason only: to help Kaiser reach its goal of emerging from Chapter 11 and strengthening its long-term competitive position.
You may recall that when Kaiser filed for Chapter 11 protection, we identified retiree obligations as one of the items that must be addressed in order for the company to emerge from bankruptcy. The total retiree benefit obligation (other than pensions) for hourly and salaried retirees and active employees is currently estimated to have a present value in excess of $700 million, and the company is currently spending almost $60 million per year on such benefits.
On July 24, we filed a motion with the U.S. Bankruptcy Court that begins the process by which certain retiree benefits ultimately will have to be modified or terminated as part of the reorganization. In particular, the motion asks the Court to approve the appointment of a committee of salaried employees with whom we can discuss the necessary changes. The Bankruptcy Code permits such changes if they are necessary for reorganization and meet other requirements. Separately, the company has begun to take steps to address hourly retiree benefit issues with appropriate union representatives.
Clearly, we must make some tough decisions in this regard, but we do so with an eye toward our overriding objective of emergence from bankruptcy as a stronger company.
Thank you for your continued support.
Sincerely,
Jack A. Hockema
President and Chief Executive Officer
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