Ormet Corporation Reaches Agreement on Debt Restructuring and Sale of Business to Wayzata Investment


Ormet Corporation Reaches Agreement on Debt Restructuring and Sale of Business to Wayzata Investment Partners

Ormet Files Voluntary Chapter 11 Petition to Facilitate the Restructuring;

Operations to Continue Without Interruption During Chapter 11 Process;

Wayzata to Provide $30 million in Debtor-in-Possession (DIP) Financing

HANNIBAL, Ohio--(BUSINESS WIRE)-- Ormet Corporation, a leading producer of primary aluminum, announced today that it has signed a definitive Asset Purchase Agreement with Smelter Acquisition, LLC, a portfolio company owned by private investment funds managed by Wayzata Investment Partners LLC. ("Wayzata"), in connection with a proposed financial restructuring of Ormet. Wayzata-managed funds are also Ormet's largest pre-petition lender and have agreed to provide Term DIP financing to ensure a smooth ownership transition to Smelter Acquisition, LLC. The restructuring will be implemented through a proceeding in the U.S. Bankruptcy Court in the District of Delaware, where the Company filed a voluntary chapter 11 petition today. The Asset Purchase Agreement, which has been filed with the Court, provides for Smelter Acquisition, LLC to purchase substantially all the Company's assets, subject to higher or better offers and Bankruptcy Court approval. The Company has received aggregate commitments of $90 million of DIP Financing, consisting of a $30 million Term DIP financing from Wayzata and a $60 million DIP facility from Wells Fargo, which will replace its $60 million pre-petition revolver with Ormet. Upon Court approval, these DIP financings should provide sufficient liquidity to meet ongoing obligations and ensure that the Company's operations continue without interruption.

"This is a positive and necessary step for Ormet and is in the best interest of the Company, our employees, suppliers, customers and other key stakeholders," said Mike Tanchuk, Chief Executive Officer and President of Ormet Corporation. "The Chapter 11 filing will allow Ormet to accomplish two important goals. First, to sell the company in a controlled process that is designed to ensure that the highest and best offer is received. Second, to restructure the debt and legacy costs while operations continue. We will come out of this process stronger and better positioned for the future." Mr. Tanchuk emphasized that Ormet expects its day-to-day operations to continue during the Chapter 11 proceedings and sales process. "We do not anticipate that any customers or suppliers will experience any change in the way we do business with them," Mr. Tanchuk said. "We have secured adequate financing so that we will be able to pay our vendors in the ordinary course of business for all goods and services and customers continue to receive the same quality products to which they are accustomed."

As a routine matter, Ormet has sought approval to continue the payment of employee wages, salaries and benefits. The Company anticipates that the Court will approve this request in the next few days. "We greatly appreciate the ongoing loyalty and support of our employees," said Mr. Tanchuk. "Their continued dedication and focus on producing quality products safely is absolutely critical to our success going forward. Company management will be meeting with employees over the next several days."

Mr. Tanchuk acknowledged that the Company's high level of debt and legacy costs have been obstacles to achieving profitability. "Ormet has done everything possible during very difficult financial times to pay its debt and legacy obligations. However, with a low metal price and higher power costs, we no longer have the financial liquidity to continue to do this. Ormet and its employees have made great strides in reducing costs, but this is simply not enough to overcome the headwinds of metal price and energy costs."

The purchase price for the Company's assets under the Asset Purchase Agreement with Smelter Acquisition, LLC would consist of repayment or assumption of the DIP loans, credit bidding of $130 million of Ormet term loans held by Wayzata-managed funds, delivery of $1 million of buyer securities, and payment of cash for certain fees and expenses to be incurred in the administration of the bankruptcy proceedings. In addition, the buyer would assume specified normal course liabilities of the Company, but would not assume many of the Company's legacy liabilities. It is not anticipated that the purchase price would be sufficient to provide any recovery to the Company's shareholders.

The Asset Purchase Agreement is subject to certain conditions, including satisfactory amendments to the Company's electric power agreement, collective bargaining agreements and Bankruptcy Court approval. In addition, the Company will solicit competing bids from other potential purchasers in accordance with a sale process to be approved by the Bankruptcy Court. Ormet's assets would be sold to the bidder submitting the highest or otherwise best offer.

Copies of the Asset Purchase Agreement and the Wayzata and Wells Fargo DIP facilities are available on the Company's website at www.ormet.com. Information about the Chapter 11 case, including access to court filings, can be obtained at http://www.kccllc.net/ormet or through a link to this service on the Company's website.

Cautionary Statement

This Statement contains forward-looking statements that can be identified by use of words such as "anticipates," "believes," "estimates," "expects," "hopes," "targets," "should," "forecast," "outlook," "projects" or other words of similar meaning. All statements that address the Company's expectations or projections about the future, including statements about the Company's strategy for growth, cost reduction goals, expenditures, financial results, liquidity and capital needs, are forward-looking statements. Forward-looking statements are based on the Company's estimates, assumptions and expectations of future events and are subject to a number of risks and uncertainties and may or may not be realized. The Company cannot guarantee its future performance or results of operations. All forward-looking statements in this press release are based on information available to the Company on the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking statements, except as may be required by law. The Company's business is subject to a number of significant risks and uncertainties, including the potential adverse impact of its Chapter 11 cases on the Company's operations and relationships with customers and suppliers and its ability to close an asset purchase agreement with Wayzata or another purchaser. Reference is made to the risk factors and other disclosures contained in the Company's Information and Disclosure Statements for year ended December 31, 2011, which is available on the Company's website at www.ormet.com. Given the significant uncertainties and risks to which the Company is subject (a) the reader should not place undue reliance on forward-looking statements contained in this press release and (b) the Company's future results could differ materially from the Company's current results and from those anticipated in the Company's forward-looking statements.

Headquartered in Hannibal, Ohio, Ormet Corporation is a major U.S. producer of aluminum. Ormet employs approximately 1,250 people. For more information, visit the Company's website at www.ormet.com.

Ormet Corporation
Matthew Powell, 740-483-2801

KEYWORDS: United States North America Ohio


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