NEW YORK (AP) -- Aleris International Inc. said Friday its U.S. operations filed for Chapter 11 bankruptcy as the aluminum product producer seeks to reorganize "in the midst of a significant economic downturn characterized by a marked decrease in demand," particularly from car makers.
The company, based near Cleveland, is conducting business as usual and has obtained nearly $1.08 billion of debtor-in-possession financing to fund U.S. operations.
Aleris's bankruptcy filing Thursday in a Delaware federal court lists Deutsche Bank as administrative agent of the debtor-in-possession facility, with significant contributions from Oaktree Capital Management and Apollo ALS Holdings.
The privately held company's filing states that "in the past four months, aluminum prices declined by approximately 35 percent on account of decreased demand and strong supply."
Further, in the past six months the company's borrowing on its credit facility exceeded that facility's "borrowing base," and Aleris lost access to additional funds, creating "a severe liquidity constraint," the filing states.
Not all the company's businesses are affected by the bankruptcy filing, however.
"The European business development is equally challenging as in the U.S., but we have sufficient cash reserves," Roeland Baan, president of Aleris Europe, said in a statement released by the company.
As part of the DIP financing, a new financing facility of up to $180 million will be made available specifically for Aleris Europe.
In addition, Aleris' Asian, Latin American and Canadian and operations are not included in the bankruptcy filing.
Pending court approval, the debtor-in-possession financing includes a new $500 million term loan and a $575 million revolving credit facility that replaces its previous revolving credit facility.
As of Dec. 31, the company reported total assets of nearly $4.17 billion and total liabilities of nearly $3.98 billion. Revenue last year totaled nearly $5.91 billion.
During the third quarter, Aleris lost $197.8 million compared with a profit in the year-earlier quarter of $3.5 million.
Since December 2006 the company has been owned by private equity firm Texas Pacific Group, which paid $1.7 billion for Aleris.