RESTRUCTURING FAQs

1. What does Chapter 11 mean for Kaiser Aluminum?

Kaiser’s decision to file for Chapter 11 was a strategic business decision designed to provide the company with the time and tools necessary to stabilize our financial position and improve our overall operations.   Our operations, production and delivery schedules have continued without interruption.

The company believes that its component businesses are sound and, together with ongoing productivity initiatives, are strategically positioned to operate profitably over the long term. Throughout this process, the company has strived to maintain its high performance standards with customers, employees, and suppliers.

2. Why did Kaiser decide to file Chapter 11?

Prior to February 12, 2002, Kaiser faced significant near-term debt maturities at a time of unusually weak aluminum industry business conditions, depressed prices, and a broad economic slowdown that was further exacerbated by the events of September 11th.  In addition, the company became increasingly burdened by asbestos litigation and growing retiree medical and pension costs.  The confluence of these factors created the prospect of continued operating losses and negative cash flow, which resulted in lower credit ratings and an inability to access the capital markets.  As a result, the company and its advisors determined that a filing was the best strategic decision to stabilize the company’s finances while developing and implementing a plan to return Kaiser to sustained profitability.

3. Who is actually running the company during Chapter 11?

Kaiser continues to be managed by its board of directors and the company’s management team led by President and CEO Jack Hockema. However, certain decisions and activities require the approval of the Court.

4. Does Chapter 11 mean the company does not have enough money to operate?

Absolutely not.  In fact, the company has a credit facility from Bank of America.  Called a Debtor-in-Possession (DIP) facility, it provides assurance of adequate liquidity for working capital and other uses.  In addition, the company has maintained adequate cash on its balance sheet since the February 12 filing. 

5. When does the company expect to emerge from Chapter 11?

The company is targeting an emergence from Chapter 11 in the first half of 2005.

6. Has Kaiser filed a Plan of Reorganization with the Court?

No.  Although a Plan of Reorganization is required within 120 days after the filing of Chapter 11, the Court typically grants extensions of the deadline in complex cases and, in fact, has granted such extensions to Kaiser. 

7. Where does the company stand in the restructuring process?

Through the initial stages of the restructuring, there has been no material impact on the operation of Kaiser’s facilities.  The company remains focused on providing the highest quality products and best in class customer service that has been Kaiser’s hallmark.

The Court has approved the company’s Debtor-in-Possession financing facility along with normal course business activities. A Creditor’s Committee (representing trade creditors and bondholders) and an Asbestos Committee have been named to work with Kaiser on the development of its Plan of Reorganization.  Additionally the Court has ruled favorably on a number of technical, legal and procedural issues relating to a variety of matters, the net effect of which has been to reaffirm “business as usual” operations. 

8. Do companies successfully emerge from Chapter 11 and survive?

Yes, many companies have emerged and prospered.  Companies that have a fundamentally sound business and loyal customer base often use Chapter 11 to strategically strengthen their operations. We believe that Kaiser falls into this category. We are using the time and tools provided by the law to improve our financial structure.

9. What’s the difference between a Chapter 11 and a Chapter 7 filing?

Kaiser filed for Chapter 11, which enables a company to continue operating while it reorganizes and prepares a plan for emergence from Chapter 11.  Chapter 7 is a process in which companies liquidate their assets and go out of business. 

10. Is the company’s common stock still traded?

Yes. It is traded on the OTC market, under the symbol KLUCQ.

11. Where can I find additional information about Kaiser’s financial condition?

Kaiser continues to issue quarterly press releases on its financial results. In addition, the company continues to file quarterly and annual financial statements (as well as related documents) with the United States Securities and Exchange Commission (SEC).  In addition, as per the rules of the United States Bankruptcy Code, the company files summary monthly operating reports (MORs) with the Court.   Company press releases as well as the MORs can be found elsewhere on this web site. SEC documents are available at www.sec.gov.

13. Have customers and suppliers continued to do business with Kaiser?

Absolutely.  The day-to-day operations of the company’s manufacturing and sales organizations are virtually unaffected by the Chapter 11 filing. The company is committed to maintain the same levels of quality and service as it works through this process.  In addition, the company's DIP financing, along with our invested cash, should ensure adequate working capital.

14. Should a supplier or potential supplier be concerned about getting paid?

Once a company files for Chapter 11, suppliers of goods and services provided to the company after the filing date enjoy the protection of the Court and are assured of payment. 

15. Where can I go for additional information?

Employees may be able to get answers for some of their questions from their supervisors or human resources department.  Customers, suppliers and other interested parties should talk to their regular company contacts.

In addition, the company will offer timely news and updates elsewhere on this web site (www.kaiseral.com).  The web site also enables interested parties to provide feedback to the company.