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September 22, 2003
Monthly Update to Customers, Employees, Suppliers, and Friends of Kaiser Aluminum:
In Today’s Court Hearing
The most noteworthy item was the Court’s approval of our request to restructure power transmission contracts with the Bonneville Power Administration. As previously described, the new agreements cover the Trentwood and Mead facilities in Washington and, when executed, will provide three key benefits: a reduction in ongoing costs, the assurance of continued transmission service, and greater flexibility than existed under the previous agreements. The next Court hearing is scheduled for October 27.
Other Chapter 11 Work is Ongoing
As most of you know, the company's goal is to emerge from Chapter 11 in 2004. To that end, we continue to explore alternatives and solutions regarding various legacy liabilities that must be addressed as part of our restructuring. Although we have nothing new to report on this front, I think it's important for you to know that we are in fact having ongoing dialogue with a variety of constituents regarding such issues as pensions, retiree medical, and asbestos. We will certainly keep you informed as material developments occur.
Exploration of Potential Sale of Commodities Assets
You may have seen recent news reports regarding the company’s exploration of the potential sale of assets in its commodities business. Some of these reports included speculation about various details of this process. We don’t think it’s appropriate for us to speculate about the process and, indeed, much of the process is governed by the kinds of confidentiality agreements that are typical in such matters. We expect to know more about this process in the next few months. Until then, there is very little we can say at this point beyond the disclosure we made in our Form 10-Q that we filed with the U.S. Securities and Exchange Commission on August 14. As we said:
- In light of the company’s stated strategy of market leadership and growth in fabricated products and to further the company’s ultimate planned emergence from Chapter 11, the company has determined that it is appropriate to explore the possible disposition of one or more of its commodity assets.
- The company, through its financial advisor, has been in contact with a number of parties with possible interest in the commodity assets and has provided a number of parties certain information pursuant to confidentiality agreements.
- While no commodity asset sales are currently imminent, it is possible that one or more sales may occur in late 2003 or the first half of 2004. Any sale of assets would be subject to various prior approvals including, but not limited to, approvals by the company’s Board of Directors, the Court and the DIP Facility lenders, and no assurances can be given that acceptable offers will be received for any assets or that any assets will ultimately be sold.
Liquidity is Solid
Kaiser continues to maintain liquidity of about $200 million, supported in part by the amendment to our Credit Agreement that I described in last month’s letter.
Thank you for your ongoing support.
Jack A. Hockema
President and Chief Executive Officer
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