Aluminum producer Ormet Corp. recently completed its exit financing to pull the company out of bankruptcy. Private-equity fund Matlin Patterson Asset Management is now the company's largest shareholder after investing in the company and buying pre-petition debt.
Bank of America Business Capital, meanwhile, provided a four year, $150 million revolver that will be used to pay off debtor-in-possession financing provided by General Electric Capital Corp. Matlin Patterson also stepped up with a $30.9 million term loan.
Before filing for bankruptcy Ormet had a $160 million bank facility and $225 million of senior note debt. The company filed for Chapter 11 protection in January 2004 in response to low metal prices, weak demand and high energy costs. An out-of-court restructuring was attempted throughout 2003, but agreement could not be reached.
Although some factors still exist, such as high medical benefit and energy costs, the company was able win court approval for its reorganization last December with a reduced debt burden with the senior notes converted into equity. In April the company officially exited bankruptcy. Jack Teiz, v.p. of finance, said the company is now looking to continue to grow and expand its market share. Ormet had more than $500 million in annual sales in 2004.
"B of A offered a better combination of availability, pricing, flexibility and fees," said Teiz, of the decision to use the bank instead of GE. "It was a combination of all those factors," he said, but noted that "GE was also very competitive." According to Michael Anuszewski, a senior v.p. at Bank of America Business Capital, consulting firm Xroads Solutions Group paired the bank and the lender. Ruth Ford, a principal at Xroads, was Ormet's chief restructuring officer. "We worked very well together with Xroads Solutions and the management team of Ormet to come up with a creative flexible financing solution to meet the company's needs," said Auszewski.
The 12-month DIP GE provided included a $160 million revolver which the company extended for three months. Ormet also had a $30 million DIP loan from MatlinPatterson. Evercore Partners originally got Matlin Patterson involved.