Aleris files Chapter 11 while operations continue

Aleris International, Inc. announced that it and its wholly-owned United States subsidiaries have filed petitions for voluntary reorganization under Chapter 11 of the United States Bankruptcy Code as a result of financial constraints related to deteriorating demand, earnings, and liquidity caused by the steep decline in global economic conditions. The filing was made in the United States Bankruptcy Court in Delaware. The Company’s European, Asian, South American, Mexican and Canadian operations were not included in the filing.

To fund its global operations during the restructuring, Aleris has secured $1.075 billion of debtor-in possession (DIP) financing. Subject to court approval, the DIP credit facilities include a new $500 million term loan and a $575 million revolving credit facility that replaces the Company’s previous revolving credit facility. These will be used for the Company’s normal operating and working capital requirements, including wages and benefits, supplier payments and other operating expenses during reorganization. The Company believes that the DIP credit facility provides sufficient funds for its reorganization effort under Chapter 11.

“We have moved aggressively to reduce our costs and eliminate capacity to offset the negative effects of the global economic slowdown. However, given the unpredictability of the speed and severity of the downturn over the last few months, these actions were not sufficient to counter the combination of challenges Aleris faces, including a sharp deterioration in demand for our products by the automotive, housing, and general industrial products sectors and an unprecedented decline in aluminum prices which limited our borrowing ability,” said Steven J. Demetriou, Aleris chairman and CEO.

“Aleris is conducting business as usual across the Company,” continued Demetriou. “Our customers can continue to have confidence that they will receive their orders on time and as specified. Our suppliers can expect timely payment in full for all goods and services provided from today forward. Furthermore, we have petitioned the Court for customary first day orders, which will ensure that our employees will be paid in full and on the normal schedule and that our operations will function normally and without any disruption.”