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Oaktree objects to Almatis debt revamp

Proposal from shareholder Dubai International Capital LLC 'will saddle the business with too much debt and excessive cash interest charges'

  • Bloomberg
  • Published: 00:00 July 31, 2010
  • Gulf News

London: Oaktree Capital Management LLC filed an objection to a debt restructuring plan for German alumina products maker, Almatis, as it wrestles for control of the company, according to court documents.

The proposal from shareholder Dubai International Capital LLC "will saddle the business with too much debt and excessive cash interest charges," Los Angeles-based Oaktree said in the filing to the US Bankruptcy Court for the Southern District of New York Thursday. It "raises questions not only about the debtors' long-term viability, but the feasibility of the plan in the short-term as well."

Oaktree, Almatis's largest senior lender, also said it started talks with the company for a revised restructuring proposal that would cut its debt to a "significantly lower level" and provide junior lenders with better recoveries.

Oaktree holds about $300 million (Dh1.1 billion), or 46 per cent of Almatis's senior debt, it said in the filings. The Frankfurt- based company sought Chapter 11 bankruptcy protection from creditors in April.

Almatis a week ago filed a motion in support of Dubai's proposal, which will repay senior creditors in full while junior lenders swap their debt for less than 50 per cent of shares.

Almatis defaulted on $40 million of debt in June 2009 after the economic downturn sapped demand for its products. Revenue is projected to rise to $534 million this year from $400 million last year.

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