Trustee wants to liquidate smelter now
Tuesday, November 4, 2003 8:16 AM PST
By Pat Forgey
Printable version
E-mail this articleUnable to find a buyer for Longview Aluminum, a bankruptcy trustee said Monday that he'll propose this week that it be sold off piecemeal to satisfy creditors.
"We have held open the prospect of a buyer for as long as possible," Bill Brandt, a Chicago businessman who is the Longview Aluminum trustee, said Monday. The company, owned by chairman Michael Lynch of Chicago and other investors, filed for bankruptcy protection in March.
In August, federal bankruptcy Judge Eugene Wedoff of Chicago, took control of the company away from Lynch and turned it over to Brandt to protect the interests of the creditors. Wedoff must approve any liquidation plan as well.
On Saturday, former Longview Aluminum union members began a vigil outside the smelter on Industrial Way. They were protesting Brandt's decision to liquidate the plant's assets, and said they still hoped to save the plant.
"Jumping to the conclusion that the plant must be liquidated is not the right decision at this point in time," Gaylan Prescott said from the vigil Monday. He is the staff representative of the United Steelworkers of America, the largest of the unions that make up the Longview Federated Aluminum Council, which represents the plant's workers.
"We're seeing a rebound in Aluminum prices and power markets are coming into balance," Prescott said. "Everything on the horizon would indicated the smelter could resume its 60 years of operation if they don't dismantle it."
Reynolds Metal Corp. owned the smelter for 60 years. When Alcoa took over Reynolds in 2000, it was forced to sell off the Longview plant to address concerns by European anti-trust regulators. Alcoa sold the plant and leased the land under it to metals industry entrepreneur Lynch, who also owned McCook Metals, one of the smelter's major customers.
Lynch renamed the plant Longview Aluminum, and immediately shut it down to sell its valuable power allocation back to the Bonneville Administration for $226 million. Power prices have since moderated, but McCook Metals went out of business and Lynch never reopened the plant. Steelworkers spent months in negations with Lynch, but said at the time he never really appeared interested in reaching an agreement.
The smelter is too important to Longview and the workers to give up, said Prescott.
"We have absolutely no doubt this is one of the best smelters in the U.S. today. It has a very bright future," he said.
Brandt, however, said that since becoming the bankruptcy trustee he's spent three months looking for a buyer and been unable to find one.
"My knowledge of potential buyers is now so thorough, I'm now convinced we could wait a year" and it wouldn't help, he said. "There's just nobody out there."
Prescott said the workers would like 90 days to give them time to explore other options for the plant. One might be to issue bonds backed by the plant's assets to be used to pay off creditors. Possible ownership structure or sources of investment capital have yet to be determined, he said.
"What the details are would have to be worked out, which is why we need some time," he said.
Ongoing costs of maintaining the Longview Aluminum plant are eating into the company's assets, and Brandt said he cannot let an asset that belongs to the plant's creditors continue to lose value without a hope of success. Even if he wanted to push for even more time, creditors such as the Bonneville Power Administration and the Pension Benefit Guarantee Corp. wouldn't allow that, he said.
"I can't pay indefinitely those kinds of costs," he said. "Bonneville and the PBGC (Pension Corp.) are fighting me tooth and nail."
Representatives of Bonneville and the PBGC did not return phone calls Monday.
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