Ormet sale hearing postponed as negotiations continue

A scheduled Wednesday sale of bankrupt US aluminum producer Ormet Corp. to Wayzata Investment Partners was postponed until June 3 by a federal bankruptcy judge because negotiations are continuing on the disputed terms of the proposed transaction.

Judge Mary Walrath of the US Bankruptcy Court for the District of Delaware in Wilmington had been expected to rule on Hannibal, Ohio-based Ormet's request to be sold to Smelter Acquisition LLC, a portfolio company managed by Wayzata, for $221 million in debt forgiveness and cash.

Ormet, owner and operator of the 260,000 mt/year Hannibal smelter and a 540,000 mt alumina refinery in Burnside, Louisiana, told the court this week it faced possible liquidation if the sale was not approved. Wayzata, the stalking horse bidder, was the only company to offer to buy Ormet by the court's May 8 deadline.

An attorney involved in the case said the Wednesday sale was canceled at the last minute to give the Pension Benefit Guaranty Corp., a US agency, and Ormet's unsecured creditors committee more time to thrash out provisions of the sale with Ormet and Wayzata, based in Wayzata, Minnesota.

The attorney, who asked not to be identified, indicated the existing terms are not agreeable to all the principal parties.

The PBGC has objected to the sale to Wayzata, saying the deal would leave Ormet's pension funds underfunded by about $235 million. The agency, which protects the retirement incomes of more than 44 million Americans employed in the private sector, wants Wayzata to assume at least some of Ormet's underfunded pension liabilities.

This marks the second time the court has scrapped a sale hearing because of disagreements among the parties in the case. A May 14 hearing also was canceled after PBGC lodged its objection.