Kaiser Aluminum Signs Agreement to Sell Portion of Interest in Alumina Refinery
HOUSTON--(BUSINESS WIRE)--June 17, 2001--Kaiser Aluminum & Chemical Corporation, the operating subsidiary of Kaiser Aluminum Corporation (NYSE:KLU), said today it has signed a definitive agreement to sell an approximate 8.3% interest in Queensland Alumina Limited (QAL) to Comalco Limited, leaving Kaiser with a 20% ownership position in QAL after consummation of the transaction.
The total value of the transaction amounts to approximately $189 million, consisting of approximately $159 million in cash plus Comalco's assumption of approximately $30 million of off-balance sheet QAL indebtedness currently guaranteed by Kaiser. Kaiser expects the transaction to result in a favorable one-time, after-tax net income impact of at least $75 million.
Kaiser said the transaction is expected to close during the third quarter of 2001, subject to certain closing conditions, including approvals by certain Australian government authorities and by the lenders under Kaiser's Credit Agreement.
As a result of the sale, Kaiser's share of QAL's current total annual rated capacity of 3.65 million metric tonnes would be reduced from approximately 1.03 million metric tonnes to approximately 730,000 metric tonnes.
"Proceeds from this transaction, together with cash flow from operations and other available sources of funds, should provide sufficient flexibility to meet our near- to medium-term financial requirements," said Raymond J. Milchovich, Kaiser's chairman and chief executive officer. "When combined with Kaiser's previously announced performance improvement initiative, the transaction positions the company for a strengthened balance sheet and future earnings growth. At the same time, we retain a material ownership position in QAL, which is one of the largest and lowest-cost alumina refineries in the world."
Historically, Kaiser has sold about half of its share of QAL production to third parties and has used the remainder to supply its Northwest U.S. smelters, which are temporarily curtailed. The reduction in Kaiser's alumina supply associated with this transaction will be partially offset by recently announced increases in capacity at the company's 65%-owned Alpart refinery in Jamaica and the return of the Gramercy, Louisiana, refinery to full operations at a higher capacity. The transaction will have no adverse impact on the company's ability to satisfy existing third-party alumina customer contracts.
Subsequent to the transaction, QAL ownership interest will be as follows: Kaiser (20.0%), Comalco (38.6%), Alcan (21.4%), Pechiney (20.0%).
Kaiser Aluminum Corporation is a leading producer of alumina, primary aluminum, and fabricated aluminum. MAXXAM Inc. (AMEX:MXM) directly and indirectly holds approximately 63 percent of Kaiser. |
