HANNIBAL, Ohio--(BUSINESS WIRE)--Ormet Corporation, a top U.S. producer of aluminum, today announced that it had secured the financing to restart its Burnside, Louisiana alumina refinery. Ormet will spend approximately $50 million to bring Burnside back into operation and create approximately 250 new jobs. The production of alumina at Burnside is a key part of bringing Ormet’s cost to make aluminum down to remain competitive with the rest of the world. About half of Ormet’s investment will be in capital and maintenance projects. Ormet plans to produce alumina early in the fourth quarter of this year and will have a capacity of 540,000 metric tonnes annually of alumina. The Burnside refinery had been idled in 2006 when alumina prices tumbled and natural gas prices rose rapidly.
The State of Louisiana has been very supportive with providing Ormet with a multi-faceted package of assistance which could aggregate $15.7 million over 10 years. Our Revolving Credit facility with Wells Fargo Capital Finance, LLC was increased from $50 million to $60 million. Wells Fargo Capital Finance, LLC and its predecessors have been involved with Ormet since 2007. The revolving credit facility will mature on March 1, 2013 and is secured by a first lien on current assets and a second lien on all other assets, with interest at prime plus 50 BPS or LIBOR plus 275 BPS.
Ormet also secured a new term loan for $30 million from a private investment fund managed by Wayzata Investment Partners. Wayzata is an SEC registered investment advisor located in Wayzata, Minnesota. Wayzata has supported Ormet for a number of years and previously had provided the funding for a $110 million term loan that facilitated the refinancing of the Company’s outstanding debt and provided liquidity for other general corporate purposes.
Bank of New York Mellon Corporation will be the agent for the new $30 million term loan, added on to the $110 million four-year term loan entered into on March 1, 2010. The new term loan has an original issue discount of 5% and a 14% interest rate. The loan is secured by a first lien on the majority of the land and all of the property, plant and equipment with a second lien on the balance of the assets.
“I am very pleased that we are restarting the Burnside refinery and what it will mean to help employment in the area. Burnside will improve our competitiveness in a worldwide market,” said Mike Tanchuk, Ormet’s CEO. “It is very encouraging to see the strong support from Governor Jindal, Ascension Parish, Wayzata Investment Partners and Wells Fargo Capital Finance, LLC as Ormet moves ahead.”
Ormet plans to post its 15c2-11 for the first quarter of 2011 on May 23, 2011.
Certain statements contained in this press release constitute forward-looking statements within the meaning of the federal securities laws. Such statements are based on current expectations, and the actual results and the timing of certain events could differ materially from those projected in or contemplated by these forward-looking statements due to a number of factors. Readers are cautioned that Ormet's business is subject to significant risks and uncertainties.
Headquartered in Hannibal, Ohio, Ormet Corporation is a major U.S. producer of aluminum. For more information, visit the website at www.ormet.com.