HANNIBAL - Last year, Wayzata Investment Partners offered to purchase the Ormet Corp. aluminum smelter for $221 million, with plans to eventually power the plant with locally produced natural gas.
One year later, published reports show that Ormet officials are seeking court approval to auction of the smelter - which closed in October - after securing a "stalking horse" bid of $15.25 million. Court documents identify the bidder as CCP ORMT Acquisition.
In financial terms, a stalking horse bid is an initial offer on a bankrupt company's assets from an interested buyer chosen by the seller. Other interested buyers then may submit competing bids, but the stalking horse bid sets the bar, allowing the seller to avoid artificially low bids.
In February, Ormet officials announced intentions to sell the reduction plant that sits between the Ohio River and state Route 7 in Monroe County. This was roughly one year after the company filed for protection in the U.S. Bankruptcy Court for the District of Delaware amid a business environment that included falling aluminum prices and escalating American Electric Power bills.
Wayzata Investment Partners wanted to purchase the plant for $221 million last year, provided that Ormet could secure a reduced electricity rate from AEP. Following a long dispute with the Public Utilities Commission of Ohio and AEP - during which Ormet asked the PUCO to lower Ormet's AEP costs from $60 to $45.89 per megawatt-hour - the aluminum producer shut down the smelter in October when the PUCO did not grant as much rate relief as Ormet wanted.
This immediately placed about 900 workers in the unemployment line, a position in which many of them remain. A recent Worker Adjustment and Retraining Notification Act notice on file with the Ohio Department of Job and Family Services indicates Ormet may soon release the final 42 employees working there.
In the following months, Ormet began selling off raw assets. The company sold alumina, which becomes aluminum during the smelting process, to Switzerland-based Trafigura for $281 per metric ton. The firm also sold 2.47 million pounds of copper rods to Libertas Copper for $7.6 million, while Ormet sold its former Burnside, La., alumina refinery to Almatis Inc.
Ormet also sold carbon anodes to Pittsburgh-based aluminum giant Alcoa Inc., which defines anodes as large carbon blocks that act as electrical conductors to allow the aluminum smelting process to take place at a plant such as Ormet.
Officials with the USW blame Ohio Gov. John Kasich for the Ormet shutdown, arguing the governor should have intervened to help keep the smelter running. However, officials with the Kasich administration have emphasized the governor has no direct authority over the PUCO to force the body to lower power rates.