Sherwin Alumina Receives Preliminary Loan Access
13 Janeiro 2016 - 9:46PM
Dow Jones News
By Stephanie Gleason
Sherwin Alumina Co., the bankrupt unit of commodities giant
Glencore PLC, made its bankruptcy-court debut in Corpus Christi,
Texas, Wednesday and got preliminary access to $40 million in
financing from another Glencore affiliate.
Judge David R. Jones approved access to $500,000 of the loan and
set a hearing for final approval of the loan on Feb. 10 in Houston,
Texas, where he also hears cases.
Joshua Sussberg of Kirkland & Ellis LLP said the loan, from
Glencore affiliate Commodity Funding LLC, was the only financing
available to Sherwin and that any shutdown of the company's alumina
smelting activities would be very costly to restart.
Mr. Sussberg also noted that while the company has "serious
labor issues"--having had its 455 unionized employees off the job
since October 2014--that was an issue the case would address
later.
Sherwin also received a number of other administrative approvals
Wednesday, allowing it to pay some critical vendors, taxes and
utilities.
Sherwin entered bankruptcy on Monday with a plan to sell its
assets to another Glencore unit called Corpus Christi Alumina in
exchange for forgiveness of $95 million in debt plus $250,000 in
cash. That cash is intended to be used to pay unsecured creditors,
owed roughly $17 million.
The company hopes to gain court approval of its bankruptcy-exit
plan by March 31, according to court documents.
The Texas-based company was acquired by Glencore in 2007 and is
capable of producing 1.65 million tons of alumina annually,
although it only produced 1.38 million tons last year. The company
has been struggling with its liquidity as low demand and oversupply
from China hurt aluminum prices. In 2015, Sherwin's projected gross
revenue was $348 million, 98% of which came from sales of its
product to Glencore, and projected net operating losses were $42.1
million.
Sherwin, founded in 1953, marks the second business that
Glencore has put into administration in less than a year. Glencore
put its South African Optimum Coal Holdings Ltd. into the South
African equivalent of bankruptcy protection in August after a fall
in coal prices meant it was selling coal to South Africa's power
utility, Eskom Holdings Ltd., at below cost, due to a long-term
contract it was unable to renegotiate.
Write to Stephanie Gleason at stephanie.gleason@wsj.com
(END) Dow Jones Newswires
January 13, 2016 18:31 ET (23:31 GMT)
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