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Noranda Finds Bidder for Its Flat Rolled Business

Noranda flat rolledNoranda Aluminum Holding Corporation entered into an asset purchase agreement for its flat rolled products business with Gränges AB, a supplier of rolled products for brazed aluminium heat exchangers in Sweden. Under the agreement, a subsidiary of Gränges will serve as the “stalking horse” bidder for Noranda’s flat rolled products business in a court-supervised sale process designed to maximize the value of such business. The agreement values the Flat-Rolled Products business at US$302.5 million, on a debt-free, cash-free basis.

The downstream aluminium rolling business, operating as Norandal USA, Inc., manufactures foil and other light gauge aluminium products for stationary and automotive heat exchangers, packaging, and transformers. The four rolling mills are located in the southeast U.S. and have net sales amounting to approximately US$550 million in 2015.

Noranda filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code on February 8, 2016. The company seeks to sell its downstream aluminium rolling business as a part of the restructuring.

The stalking horse bidder is not assured of winning the auction. If other qualified bids are submitted, Noranda will conduct an auction pursuant to section 363 of U.S. Bankruptcy Code, which is currently scheduled for July 7, 2016.  The asset purchase agreement with Gränges sets the floor for the auction, which is designed to achieve the highest or otherwise best offer.

Should Gränges win the auction and receive final approval as buyer from the U.S. Bankruptcy Court, an announcement is anticipated in mid-July, 2016. The acquisition would be expected to close during the third quarter of 2016 and is anticipated to be accretive to earnings per share in 2016. Gränges and Noranda have obtained required clearances for the transaction under U.S. antitrust laws.

“An acquisition of Noranda’s aluminium rolling business would be in line with Gränges’ stated strategy to establish production capacity in North America and to grow into adjacent market segments in the aluminium rolling industry,” explained Gränges in a press release. “The acquisition would significantly strengthen Gränges’ offering and position within HVAC&R and serve as a platform to expand the comp-any’s business within heat exchanger materials for the automotive industry in the Americas.”

Upstream Business

Separately, Noranda filed a motion with the Bankruptcy Court seeking approval of Bidding Procedures to conduct an orderly and efficient sales process of its upstream business, which includes primary production of aluminum. The motion outlines a sale process that is open to all qualified bidders subject to the rules of the bidding procedures. Through this process, Noranda will select the highest or otherwise best offer for the sale of all, or substantially all, of the assets comprising its upstream business.

Noranda expects the bidding procedures motion to be heard by the Bankruptcy Court on July 14, 2016.  Under the proposed bidding procedures, the deadline to submit qualified bids is September 15, 2016 and, if multiple bids are submitted, an auction would take place on September 22, 2016.  Subject to the court’s availability, a hearing to approve a sale will take place on September 27, 2016.

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