Noranda files for bankruptcy

Noranda Aluminum Holding Corp. has filed for Chapter 11 bankruptcy protection, the company announced Monday in a news release.

In the same release, Noranda announced an expected curtailing of production at the New Madrid, Missouri, aluminum smelter beginning in March.

In conjunction with the Chapter 11 filing, Noranda entered into an agreement in principle with its existing asset-based loan lenders for up to $130 million in debtor-in-possession financing. This will allow the company to remain in possession of property upon which creditors have an interest. The company has received a commitment for up to $35 million in debtor-in-possession financing from certain lenders, according to the news release.

If the plans are approved, the company said it will use the new financing, combined with cash generated from the company’s operations, to support business during the court-supervised process.

Despite this, all production at the New Madrid smelter is expected to cease in March. Noranda will continue operating the single remaining pot line at the primary aluminum smelter until then. The company claimed in the release it will maintain the flexibility to restart operations at New Madrid if conditions allow. But once production is curtailed, “only a small group of employees will remain for the purposes of securing the facility,” John Parker, vice president of communication and investor relations at Noranda, said.

The possibility of a March closure of the New Madrid plant has loomed since January as Noranda issued layoffs and predicted shutdowns because of idled pot lines and continued disputes over electricity rates between Noranda and Ameren Missouri.

Last month, Noranda announced it would curtail production in New Madrid on March 12 if it could not secure a more favorable price for electrical power. Now, with Noranda’s filing For Chapter 11 bankruptcy protection and no agreement reached between the aluminum producer and Ameren Missouri, the shutdown date is imminent.

“The smelter will be idled in a time frame consistent with the March 12 date we previously discussed,” Parker said.

Although work at the New Madrid plant will be idled, the efforts to reach an agreement between Ameren Missouri and Noranda continue.

The halt of production in New Madrid “does not change the importance of achieving a sustainable power rate for all the same reasons we have pursued such a rate before. It’s just that now, instead of being necessary to keep the smelter in operation, its necessary if the smelter is to restart at some point in the future,” Parker said.

The Missouri Industrial Energy Consumers filed a petition this week with the Missouri Public Service Commission to cut Noranda’s electric rate by about 20 percent. And state Sen. Jason Silvey introduced a bill this week to begin discussions about electric-utility regulation with a goal of providing globally competitive electric rates for energy-intensive customers and encouraging investment in Missouri’s electrical infrastructure.

“We appreciate the MIEC’s recognition that consumers would pay higher electricity rates without the smelter, and we appreciate the support MIEC has offered in their most recent filing with the Missouri PSC,” said Parker.

Noranda appears to prefer legislation over a proposed rate cut, however. Parker said the rate cut proposed by the MIEC is constructive, but a short-term rate such as the one proposed does not provide the long-term structure the smelter requires.

“As we are convinced that a legislative approach such as the framework proposed by Senator Silvey is the best path to a sustainable power rate, we will continue to support such a legislative solution,” he said.

Several state representatives, including House Speaker Todd Richardson, issued a joint news release Tuesday, pledging to try to find ways to keep Noranda operating.

“Right now every option is on the table and in discussion as we work together to prevent what would be a devastating blow to the economy of the Bootheel, and our state,” Richardson said, adding he and other representatives in Southeast Missouri “have been working diligently for months now to keep Noranda operational here in Missouri.”

Holly Rehder, a Republican from Sikeston, which serves parts of Scott County, said in the release “these are jobs that the people of Southeast Missouri cannot afford to lose. We have been working diligently to find viable solutions to keep Noranda in business. This is a huge economic blow to our area and to the people who call the Bootheel home.”

bbrown@semissourian.com

(573) 388-3630

Pertinent address:

391 St Jude Industrial Park Hwy, New Madrid, MO