Kaiser Hires Help to Sell Chemical, Aluminum Units
Kaiser Aluminum & Chemical said Tuesday that it has hired two investment banking firms to help the Oakland company sell its chemicals business and to investigate possible joint-venture or sale opportunities for its aluminum operations.
But despite the possible sales, Kaiser Aluminum, the operating subsidiary of KaiserTech Ltd., is not being liquidated, a company spokesman said. KaiserTech was created in April after British investor Alan Clore bought a controlling interest in the troubled company.
“There is a more definite commitment on the part of selling all or part of industrial and specialty chemicals,” Kaiser Aluminum spokesman Robert W. Irelan said. For the aluminum operation, “we’re going out to see what the interest is. There is a distinct difference.”
Interested buyers probably will not appear for all parts of the chemicals and aluminum operations, Irelan said. “I don’t think it’s a realistic scenario,” he said.
Kaiser Aluminum has retained Salomon Bros. and Citicorp Investment Bank to seek buyers for all or part of its Cleveland-based industrial and specialty chemicals business, a profitable division that accounted for a little more than 11% of the firm’s net sales last year.
Kaiser Aluminum also said it hired Salomon Bros. “to assist it in exploring possible sales or joint ventures of various aluminum operations.”
“Our chemicals business is profitable and well positioned in a number of markets,” said James S. Pasman Jr., Kaiser Aluminum’s chairman and chief executive. “The goals in seeking a purchaser or purchasers are to achieve the best return for shareholders and the best fit for employees and customers.”
As for aluminum, Pasman said: “We are in the process of examining each and every facility and business unit.
“The approach we are taking in aluminum is to determine whether there are potential buyers or joint-venture partners with resources greater than ours to develop pieces of the business to their fullest possible potential.”
The bulk of the proceeds will be used to reduce company debt, which stood at $1.4 billion at the end of 1986. The company had reduced its debt by $135.4 million during 1986.
In Southern California, Kaiser Aluminum intends to sell a plant in Vernon that employs about 290 people in the manufacture of fluid cracking catalysts used in the oil refining industry. Also up for sale is the Filtrol chemicals sales and marketing headquarters in Brea, which employs about 20 people, and a Sylmar factory that creates paint colors with a work force of about 15 people.
Industrial and specialty chemicals had 1986 revenue of $254.4 million, not including $264 million in revenue from Kaiser Aluminum’s Harshaw/Filtrol Partnership with Chevron. Kaiser Aluminum was able to claim only 50% of the joint venture’s proceeds last year, but the firm is buying out Chevron and will put the joint venture on the block with the rest of the chemicals business, Irelan said.
The chemicals operation had operating income of $45.9 million in 1986, including Kaiser Aluminum’s share of $5.9 million earned by Harshaw/Filtrol.
The aluminum operation posted a 1986 operating loss of $120.9 million on revenue of $1.97 billion. However, KaiserTech President Cornell C. Maier recently said the company’s return to operating profitability is “imminent.”
KaiserTech is expected to report a $387-million loss in the second quarter because the company is writing down the value of various operations that are for sale or have been discontinued.
