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October 27, 2003
Monthly Update to Customers, Employees, Suppliers, and Friends of Kaiser Aluminum:
In Today’s Court Hearing
The Court approved an agreement with various federal and state agencies to resolve Kaiser’s environmental exposure at a number of sites not owned by the company. We believe the agreement outlines a fair and expeditious approach to deal with these claims. The Court also ruled favorably on a number of technical and procedural matters – for example, approving motions regarding the status of certain claims. The next Court hearing is scheduled for November 17.
Exclusivity to be Extended through February
Within the next several days, we expect to file a motion with the Court to request an extension of exclusivity through February 2004. We expect that the motion will be supported by the Unsecured Creditors’ Committee, the Asbestos Claimants’ Committee, and the Asbestos Futures Representative – and approved by the Court without objection. Filing the motion gives us an automatic extension until such time as the Court can formally grant our request.
Exploration of Potential Sale of Commodities Assets
On October 10, the company filed a motion with the Court to facilitate the possible sale of certain commodity assets (specifically our interests in the Anglesey aluminum smelter in Wales; the Alpart alumina refinery and the KJBC bauxite mining operation in Jamaica; and the Gramercy alumina refinery in Louisiana). The motion includes a description of the process by which any interested parties would submit their bids by November 7. Again, at this stage, there is nothing definitive to report. As I have described previously, any bids that we may receive would be subject to approvals from Kaiser’s Board of Directors and from constituent groups such as the DIP lenders and the Unsecured Creditors’ Committee. In the meantime, it’s business as usual at these facilities.
Other Chapter 11 Work is Ongoing
- On October 10, we filed a motion with the Court to request approval to sell three surplus parcels of land near the currently curtailed smelter at Mead, Washington. The parcels have never been used by Kaiser in the operation of the Mead facility and, in fact, two of the parcels are zoned for residential use only.
- Also on October 10, we filed a motion seeking approval of a settlement with the Port of Tacoma to exit a lease and an operating agreement related to alumina storage and transport facilities. In light of the previous sale of the Tacoma smelter and the indefinite curtailment of Mead, we no longer need the very large storage capacity that was provided by these agreements. The settlement will eliminate roughly $1 million per year in ongoing costs associated with the lease and operating agreement.
Company Supports Antidumping Petition
On October 16, Alcoa filed a petition with the U.S. Department of Commerce and with the International Trade Commission to request that antidumping duties be imposed on 6000-series aluminum alloy plate from the Republic of South Africa on the basis that such products are being sold in the United States for less than “normal value.” We have an interest in this matter because 6000-series plate is an important product for our Trentwood, Washington, rolling mill. Alcoa's characterization of the applicable market dynamics is consistent with our experience, and we believe that the petition makes a compelling case to support Alcoa's allegation. We have similar concerns and are supportive of Alcoa’s efforts.
Article Highlights Process Improvement at Greenwood
The company’s aluminum forging operation in Greenwood, South Carolina, is the subject of a very positive article in the current issue of a quarterly newsletter published by the TBM Consulting Group. The piece highlights significant process improvements at the plant. Copies of the article will be available shortly to employees on Kaiser’s internal corporate intranet site under a newly created tab labeled “Marketing/Promotional.”
Liquidity is Sound
The company’s liquidity has continued to be approximately $200 million. We expect to report our financial results for the third quarter of 2003 on or about November 14.
Thank you for your ongoing support.
Jack A. Hockema
President and Chief Executive Officer
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