Norsk Hydro, the global aluminium company, has made a last-minute approach to acquire Asia Aluminum, a high-profile Chinese company placed in provisional liquidation this year after foreign investors spurned a $1.2bn debt restructuring. The late intervention of the Norway-listed company, a leading global supplier of aluminium and related products, throws a potential lifeline to offshore investors lobbying against a restructuring plan that they fear will wipe out their holdings. The company angered investors in February when it launched a tender offer for its outstanding international bonds at less than 30 per cent of face value. The foreign investors maintained the tender offer did not reflect the company’s financial position or prospects.
Asia Aluminum claimed that the debt restructuring was needed because of deteriorating cash flow and earnings, combined with rising costs and debt burden. The company makes frames used in high-rise buildings and its fortunes waned with the sudden collapse in construction. A Hong Kong court in March appointed restructuring company Ferrier Hodgson as provisional liquidator and to decide a next step. Ferrier Hodgson was set to plea this week that three key units of Asia Aluminum be sold to a management-backed consortium called Golden Concord Pacific, for about $500m including debt.
Under that plan, holders of $450m in high-yield bonds would be repaid about 20 cents in the dollar while holders of $727m worth of so-called payment- in-kind notes expect about 1 per cent. However, Norsk Hydro at the weekend was scrambling to bid for Asia Aluminum, in a deal which it believed could secure jobs, develop the company and represent an attractive alternative offer for creditors. According to people familiar with the matter, Norsk Hydro on Friday contacted the Zhaoqing municipal government, the southern Chinese city where Asia Aluminum is based, to declare its “strong” interest in bidding for the company. It hopes to make an indicative non-binding bid within seven days. Rod Sutton, executive director of Ferrier Hodgson, said Norsk Hydro would have to “put their money where their mouth is” to stand a chance of acquiring Asia Aluminum.