Aleris International prepares to go public

Aleris International, the Beachwood aluminum producer and recycling company, plans to recycle itself again.

The company said it plans to become a public company again. In the last seven years, Aleris also has gone through mergers, buyouts from private equity firms, bankruptcy and restructuring.

The company's registration statement, filed Tuesday, doesn't yet list how many shares it plans to sell, how much money it hopes to raise, which investment banks will underwrite the deal or when a possible initial public offering could take place. Company officials declined to comment on those issues.

Aleris said in its statement filed with the SEC, it plans to use the proceeds from the IPO to fund operations and to invest in a joint-venture aluminum mill in China. The company didn't say why it is choosing to start the IPO process now, but executives have been hinting about an IPO since late last year.

Returning to the public markets would be a big step for Aleris, a company with a pretty turbulent history over the past decade.

Aleris Chief Executive Steve Demetriou formed the company in 2004 when he merged Kentucky-based Commonwealth Aluminum with Texas-based IMCO Recycling. The merger combined one of the biggest producers of aluminum in the country with one of the biggest recyclers. At the time, Demetriou noted that the companies had been partners in many ventures with IMCO providing raw material to Commonwealth.

Demetriou, who had just sold specialty chemicals company Noveon to Lubrizol, moved the merged company's headquarters to Beachwood and expanded Aleris by buying other companies.

Earnings grew quickly, eventually attracting the attention of private equity companies. The Texas Pacific Group bought Aleris in 2006, taking the company private. At the time, aluminum prices were high and rising, so Demetriou and others said the fact that the deal put $2.5 billion in debt on Aleris' books wasn't a problem.

"That is not an extraordinary" level of debt, Demetriou said at the time.

Then, 2008 came along. A banking crisis led to a housing market crash and the biggest recession since the Great Depression. Sales of aluminum for cars, houses and airplanes plummeted. The value of Aleris' assets fell, and its main creditors demanded more collateral.

In an interview in January, Demetriou said Aleris asked the Texas Pacific Group for the money, saying the underlying business was still functioning, but it needed to stay current with its credit agreements to survive.

"We were privately held by a private-equity company that decided not to inject capital when we needed capital. And almost every company needed capital during this period," Demetriou said. Without fresh cash from Texas Pacific, Aleris filed for bankruptcy in 2009.

"Our message [to employees] was pretty clear. Chapter 11 was a capitalization process," Demetriou said in January. "There was nothing broken in the company."

The debt levels that seemed manageable when aluminum was expensive became oppressive when commodity prices fell. Fortunately, Aleris' customers and partners were experiencing the same problems, Demetriou said in January.

"We actually gained some market share during the bankruptcy process because we weren't the only company that was suffering," Demetriou said. "Clearly there's a taint and stress from Chapter 11, but in that period, if you had to go through it, that was the time to go through it. Everyone was going through some sort of restructuring, whether they used Chapter 11 or not."

The company emerged from bankruptcy last year, thanks to funding from Oaktree Capital Management, Apollo Management Holdings and Sankaty Advisors.

An IPO would allow the private equity firms that funded Aleris' bankruptcy to sell their shares, potentially making a profit on their investments. Rene Stulz, an economics and finance professor at the Ohio State University, said giving investors a chance to sell shares and make a profit is a fairly typical reason for an IPO.

"It wouldn't be unusual for investors to sell some of their shares," Stulz said. Last year's IPO by General Motors, for example, allowed the federal government and the United Auto Workers sell some of their shares in the automaker.