Oaktree preps counter-proposal for Almatis restructure

Oaktree will file an objection with US courts, where Almatis sought Chapter 11 bankruptcy protection, to the company’s request to swap its support for a new restructuring proposal led by DIC.

The party to win control of Almatis now hangs in the balance, with a court hearing penciled in for next week to decide on the outcome.

The aluminium company filed for Chapter 11 in May and Oaktree, which reportedly owns 46 per cent of Almatis’s senior debt, was poised to swap its debt for an 80 per cent equity stake.

But the company made a u-turn last week saying that it preferred an alternative offer that would see DIC, GSO and funds of Sankaty Advisors and Goldentree refinance $535m of senior debt. DIC has also set aside $100m in escrow for investment into the company, the FT report said.

Under the new proposal, DIC would hold onto a 60 per cent share and mezzanine lenders 40 per cent.

Oaktree now plans to improve its proposal to make it more attractive for Almatis’s subordinated lenders, and, if accepted, would leave the company saddled with less debt.

On the other hand, DIC’s plan is supported by the company’s senior lenders as it would provide them a cash payment, not fresh debt.

DIC acquired Almatis in November 2007 for $1.2bn. In July last year, the firm said it would team up with Oaktree to create a restructuring proposal that would underwrite a capital injection and cut Almatis’s close to $1bn net debt load.

However, the following month the pair called off the joint restructuring proposal.

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