Norsk Hydro pulls Asia Aluminum bid

Norsk Hydro, the global aluminium company, has withdrawn its approach to acquire Asia Aluminum, a high-profile Chinese company placed in provisional liquidation this year after foreign investors spurned a $1.2bn debt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. People familiar with the matter said that Norsk Hydro’s last-ditch offer to become involved had been met with a frosty response in China, and that it was not prepared to enter a political battle. “Norsk is a serious global company with a large balance sheet but it was clear that neither the company or local government officials wanted to discuss an alternative rescue plan with them,” said one person familiar with the company’s thinking. The Norway-listed company is a top three global supplier of aluminium and related products, and its intervention last weekend threw a potential lifeline to offshore investors lobbying against a restructuring plan that they fear will wipe out their holdings. The future of Asia Aluminum, among the world’s top three aluminium processing companies, is being watched closely across the region – and in debt markets – as an important guide to investor rights, as mainland Chinese companies scramble to restructure their finances in the downturn. 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. 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 the next step. Ferrier Hodgson is this week set to urge that three key units of Asia Aluminum be sold to a management-backed consortium called Golden Concord Pacific, for about $500m including debt. Norsk’s withdrawal means that the Golden Concord offer is now virtually guaranteed to succeed. 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. Norsk had argued that its bid for Asia Aluminum would secure jobs, develop the company and represent an attractive alternative offer for creditors. Norsk had routed its approach through the Zhaoqing municipal government, the southern Chinese city where Asia Aluminum is based, but its officials rebuffed the advances, said people familiar with the matter. source:www.ft.com