Watsonville aluminum plant sold for $4.34 million

WATSONVILLE -- Indalex, which closed its aluminum extrusion plant at 1715 W. Beach St. two years ago, has sold the property for $4.34 million. That's almost exactly the 2008-09 assessed value of the property. The transaction closed Aug. 14. The new owner is Sapa Watsonville LLC, which lists its business address as 400 Rouser Road in Coraopolis, Pa. Attempts to reach the new owner Thursday were unsuccessful. "As far as I know, no one's come in with any development plans," Kurt Obermeyer, the city's economic development manager, said Thursday. The aluminum plant, which had 90 workers when it shut, had been one of Watsonville's larger employers. Another 46 workers had been laid off earlier. The disappearance of manufacturing jobs has been a trend in the current recession, according to Tom Nardone of the U.S. Bureau of Labor Statistics, unlike previous downturns when workers were recalled as the economy rebounded. Indalex, based in Lincolnshire, Ill., had grown to become the second largest aluminum extruder in the U.S. and Canada. But it struggled as sales fell 40 percent from the peak of the market after taking on $200 million in debt at an interest rate of 11.5 percent. When the company could not pay $11.4 million in interest to bondholders in February, it announced plans to restructure debt. In March, the company filed for bankruptcy protection, saying its assets and liabilities each ranged between $100 million to $500 million. Its biggest unsecured creditors were Alcoa, owed $6 million, and Rio Tinto Alcan, owed $5 million. The bondholders retained Convergence Capital Partners as their financial adviser. In June, Sapa Group, an aluminum extrusion firm based in Stockholm, Sweden, offered to buy Indalex's 10 active plants in the U.S. and four in Canada for $95 million. Sapa is a subsidiary of Orkla, a Norwegian industrial conglomerate founded in 1904. Meanwhile, Futura Industries in Utah offered $518,000 for the Watsonville plant's 1984 press. By the end of July, the terms of the sale to Sapa covered all 11 Indalex plants in the U.S. When the deal closed this month, Buchanan Ingersoll & Rooney, a law firm representing Sapa, said the deal was worth $150 million. Indalex employed 1,800 people and had sales of $900 million in 2008, the law firm said, noting 600 contracts and 16 facilities were reviewed during due diligence, a process that typically takes several months but was completed in a matter of weeks. Shortly thereafter, Indalex president Tim Stubbs was named president of Sapa's North American division, which is headquartered in Pittsburgh. Within days, Sapa announced its decision to close a plant in Morris, Ill., in November, putting 79 people out of work. The North American plants are running at 60-65 percent capacity due to the downturn, Stubbs said in a court document in July.