KaiserTech Ltd., the corporate parent of Kaiser Aluminum & Chemical, announced Friday that it will write down the value of a number of operations and will post a $387-million loss in the year's second quarter.
The decision by the Oakland-based holding company, which was created last spring after British investor Alan Clore took control of Kaiser, represents a significant step in the company's attempt to regain profitability.
Lower values will be logged for Kaiser's electrical products manufacturing business, some of which is for sale, and for idle and money-losing aluminum-making plants in Louisiana and Maryland. The Maryland facility is also on the block.
Writedowns will also be taken for certain operations that were discontinued in recent years. And an additional loss is expected upon sale of the company's oil and gas properties in a deal now being negotiated, spokesman Robert W. Irelan said.
Plan to Reduce Debt
"Basically, this cleans up the balance sheet," he said.
The anticipated second-quarter loss will follow a net loss of $29.3 million for the first quarter. Kaiser lost $32.7 million on sales of $2.2 billion last year.
KaiserTech's president and vice chairman, Cornell C. Maier, said the writedowns are part of the company's plan to reduce debt and return Kaiser Aluminum & Chemical to "sustained operating profitability"--a result he called imminent.
The reorganization stems from an agreement struck last year by Kaiser and Clore, who controls 31.2% of the company's common stock. When the deal closed last month, Clore invested an additional $140 million in KaiserTech in the form of a new issue of preferred stock that has voting rights and is convertible to common stock. That raised his holding to 42%.
Brought Others In
Along the way, Clore also bought up the 2% stake held by his former investment partner, Joseph A. Frates of Tulsa, Okla., who had initiated an unsuccessful battle to take over Kaiser in December, 1985. The two parted company last November when Clore agreed to the reorganization plan.
In addition, Clore became chairman of the board, bringing with him his financial adviser and six of 10 outside directors, who participated in Friday's vote on the writedowns.
James S. Pasman Jr., who succeeded Maier as chairman and chief executive of the Kaiser Aluminum subsidiary, said proceeds from the anticipated sales included in the writedowns "and other sales to be carried out in the future" will be used to reduce corporate debt.
What remains, Irelan said, is development of a new business plan as KaiserTech seeks to regain profitability as a fully integrated aluminum company with additional operations in industrial and specialty chemicals and, to a much lesser extent, in real estate holdings.