Kaiser to Shut Foundry, Take Record Loss : Alumina Unit Write-Off Will Total $160-Million

Kaiser Aluminum & Chemical announced the permanent closing of a Baton Rouge, La., alumina plant Tuesday and said the action would result in the company’s biggest full-year loss ever.

Kaiser’s decision to take a $160-million write-down in the value of the foundry and some smaller assets makes it the third big aluminum firm to take such action in the fourth quarter, reflecting a world oversupply of the metal and depressed prices.

The one-time, fourth-quarter charge, on top of a $50-million net loss through the first nine months of the year, seemed likely to put Kaiser’s 1985 loss in the $200-million range. But the company said it expects an operating profit next year, and some analysts agree.

Kaiser said the action has “absolutely nothing to do with Mr. Frates,” a reference to the takeover attempt of a group headed by Tulsa, Okla., investor J. A. Frates. The group has acquired 14.4% of the outstanding shares of Kaiser, which is fighting the attempted takeover.

Kaiser Aluminum, based in Oakland, is the third-largest integrated aluminum maker in the United States. This is its fourth consecutive year of losses, including a record $115-million deficit in 1982. The firm has been selling off assets and restructuring.

Limited Operations

The action on the Baton Rouge facility won’t change activities there, as it hasn’t operated since 1983. About 200 employees will continue limited specialty operations at the site. The company said the write-down reflects Kaiser’s admission that the aging plant won’t reopen. More extensive shutdowns and write-downs were announced in recent months by Alcoa and Reynolds Metals, the two largest aluminum companies in the country.

“When you’re look at your competitors writing off plants and you’ve got one that hasn’t run for three years, you might as well walk away from it,” said New York-based analyst Robert G. Maloney of Wood Gundy Ltd., Toronto.

At the same time, Kaiser announced a retroactive change in accounting procedures that will largely offset the effects of the write-down on the company’s net worth. As a result, the net worth will only decline by $40 million rather than the full $160 million of the write-down.

Investor Frates couldn’t be reached for comment on the plant closing.