For information: Scott Lamb
Telephone: (713) 332-4751 December 18, 2002
KAISER ALUMINUM FACES ACCELERATED FUNDING REQUIREMENT FOR
SALARIED RETIREMENT PLAN
HOUSTON, Texas, December 18, 2002 -- Kaiser Aluminum has
determined that recent lump-sum distributions from the Kaiser Salaried Employee
Retirement Plan (KRP) have triggered a special provision under ERISA (Employee
Retirement Income Security Act) that requires the company to make a pension
contribution on January 15, 2003 that is estimated to be $17 million.
However, most of this payment would be classified as a
pre-bankruptcy obligation, and the Bankruptcy Code generally does not permit
payment of such obligations without Court approval. Because this amount
represents a small portion of the legacy liabilities that must be addressed in
Kaiser's reorganization, the company does not currently expect to seek such
approval.
If the company does not make the payment, it would no longer
be compliant with ERISA's minimum funding requirements and, in turn, would be
prohibited by ERISA from making lump-sum distributions from KRP to employees who
retire after December 31, 2002.
In addition, Kaiser is analyzing other possible impacts on the
company if the required payment is not made. Those impacts include possible
technical default under Kaiser's Debtor-in-Possession (DIP) credit facility
which, if not cured or waived, would prevent the company from accessing this
facility. Kaiser is working with its lenders to resolve any technical default
that may arise. As of October 31, 2002, the company's cash and cash equivalents
amounted to $74.1 million, there were no outstanding borrowings under the DIP,
and outstanding letters of credit were approximately $40.7 million.
"Our ultimate objectives, of course, are to emerge from
Chapter 11 and remain viable long into the future," said Jack A. Hockema,
President and Chief Executive Officer. "As we continue to work toward these
objectives, we appreciate the ongoing support and understanding of our
employees, customers, and suppliers."
Separately, Kaiser has had a preliminary discussion with the
Pension Benefit Guaranty Corporation (PBGC) about the company's pension plans.
The company has no new information to report in respect of that meeting.
Kaiser Aluminum Corporation (OTCBB: KLUCQ) is a leading
producer of alumina, primary aluminum, and fabricated aluminum products.
F-940
Company press releases may contain statements that constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The company cautions that any such
forward-looking statements are not guarantees of future results and involve
significant risks and uncertainties, and that actual results may vary materially
from those expressed or implied in the forward-looking statements as a result of
various factors.
