A bankruptcy court has approved the sale of Ormet Corp. to a private-equity firm, but the southeast Ohio aluminum-smelting company says it still needs to find a way to reduce its electricity costs before it can complete its restructuring.
The new owner is Smelter Acquisition LLC, which is owned by Wayzata Investment Partners LLC of Minnesota.
Ormet, based in Hannibal, Ohio, filed for bankruptcy protection in February after struggling to deal with low aluminum prices and an increase in electricity costs from American Electric Power.
The company is the largest electricity user in the AEP Ohio system, and it benefits from the state’s largest electricity-rate subsidy, cutting its bills by more than $150 million since 2009. Other AEP customers pay for the subsidy through a charge on their bills of $2 to $3 per month for a typical household.
Mike Tanchuk, Ormet’s president and CEO, said in a statement that the company will not be able to emerge from bankruptcy unless it can find a way to further reduce its electricity bill. He said Ormet will file a request with the Public Utilities Commission of Ohio that outlines a new savings plan.
AEP is in an “ongoing dialog” with Ormet, and the utility wants to help the smelter find a way to continue operating, said AEP spokeswoman Terri Flora.
Ormet is one of the largest employers in its part of southeastern Ohio. Four of its six smelting lines are operating, with about 900 employees. If all six lines were working, there would be an additional 250 to 300 employees, the company said.
Wayzata has provided $30 million for the restructuring that will be used along with a $60 million credit facility from Wells Fargo.
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