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July 28, 2003
Monthly Update to Customers, Employees, Suppliers,
and Friends of Kaiser Aluminum:
In Today’s Court Hearing
The agenda for today’s hearing consisted almost entirely of narrowly focused and fairly routine legal matters. For example, as was the case last month, the Court again ruled to reclassify or disallow certain kinds of claims (duplicate claims, for example). The broader message here is that – week by week and month by month – we continue to make methodical progress in addressing the list of issues that must be resolved on the path to a targeted 2004 emergence.
Other Chapter 11 Matters
- With the agreement of our committees (theUnsecured Creditors’ Committee, the Asbestos Claimants’ Committee, and the Asbestos Futures Representative), we are preparing to file a motion by July 31 to extend exclusivity through October 31, 2003. Filing the motion gives us an automatic extension until such time as the Court can formally grant our request. As a reminder, “exclusivity” refers to the time period in which only Kaiser has the opportunity to propose a plan of reorganization and solicit votes for that plan. It means that no competing plan can be filed by creditors. Exclusivity is helpful because it allows everyone to focus their efforts and not be diverted by competing interests.
- As you know, we have been working throughout the Chapter 11 proceedings to address retiree benefit costs. In this regard, we recently filed a motion with the Court that begins a process by which certain retiree benefits (such as medical and life insurance, for example) ultimately will have to be modified or terminated as part of the reorganization. In particular, we filed this motion under Section 1114 of the Bankruptcy Code, which generally permits such actions if they are necessary for reorganization. Our overriding objective is to do what is required to emerge from Chapter 11 and position the company for long-term success.
Liquidity is in Good Shape
The company continues to have total liquidity of approximately $200 million. In addition, the company has reached agreement in principle with the lenders under the DIP Credit Agreement regarding a further amendment. This amendment will extend the term of the Credit Agreement by one year, increase the availability under the Credit Agreement by approximately $40 million to $50 million, and make other important changes. Thus, this amendment will provide the company with added flexibility as it continues its progress toward emergence from Chapter 11.
Other Items
The Monthly Operating Report for June will be filed on or about July 31, and we expect to report our financial results for the second quarter of 2003 in mid August.
Jack A. Hockema
President and Chief Executive Officer
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