September 23, 2002

Monthly Update to Customers, Employees, Suppliers, and Friends of Kaiser Aluminum:

Kaiser Aluminum is now well past the six-month mark in its Chapter 11 case.  Although it

may seem to some of you as though the process is unfolding slowly, I am pleased with the progress we have made to date.  In particular, within the past several weeks, we met formally to discuss long-term strategy with the legal and financial advisors to the Unsecured Creditors Committee (UCC) and with the financial advisors to the Asbestos Claimants Committee (ACC).  Those meetings went well and represented the first required step before starting the very methodical development of a formalized Plan of Reorganization that will eventually be submitted to the Court. 

Restructuring Update – BPA Contract Rejection

Today’s regularly scheduled monthly Court hearing included review and approval of a number of items – most of which were administrative or technical matters that have little or no bearing on day-to-day operations.  The one item of broader interest was the Court’s approval of Kaiser’s request to reject our 2001-2006 power contract with the Bonneville Power Administration (BPA), subject to execution of new power agreements with other providers for the ongoing normal operation of the Trentwood, Washington, rolling mill.   Rejection of the contract means Kaiser does not have to make cash payments to BPA beginning October 1 under the contract’s take-or-pay provisions.  We estimated that, based on recent prices for electricity, those obligations could have amounted to as much as $1 million to $2 million per month.

In a separate hearing on September 3, the Court approved the company’s Key Employee Retention Program. Such programs are adopted by virtually all companies in Chapter 11 – and ours was designed with the help of a human resources consulting firm to be comparable to what others have done. The program also had the full support of the UCC. 

The next regularly scheduled Court hearing is set for October 29, 2002.

Capital Investment Continues

Despite Kaiser’s Chapter 11 status, we recognize that we must continue to invest in efficiency, quality, and growth initiatives that are essential for our long-term success. In that regard, we announced on September 4 that our board of directors had approved an expenditure of $13.7 million at our 65%-owned Alpart alumina refinery to improve efficiency and support the previously announced expansion of annual production capacity to 1.65 million metric tonnes from the current 1.45 million metric tonnes.

Monthly Financial Updates Continue

As a reminder, the company continues to file Monthly Operating Reports (MORs) with the Court.  As soon as each report is filed, we post it on our corporate web site (www.kaiseral.com) and on our (internal) intranet site. The next update – for the month of August – will be filed within the week.

Kaiser is working hard to maintain the ongoing commitment of our employees, customers, suppliers, and others – and I thank you for your support thus far. If you have any comments, questions or suggestions, please visit the website.

Jack A. Hockema
President and Chief Executive Officer

Monthly Operating Reports:
August 2002
July 2002
June 2002
May 2002
April 2002
March 2002

Update Archive:
August 27, 2002
July 17,2002
June 21, 2002