Noranda buys back $33.9 million of debt, may not hit covenant ratios

By Angela McDaniels

Tacoma, Wash., July 27 - Noranda Aluminum Holding Corp. said it repaid $33.9 million principal amount of notes and borrowings during the second quarter.

The notes repurchased were floating-rate senior notes due 2014 issued by Noranda and floating-rate senior notes due 2015 issued by Noranda Aluminum Acquisition Corp., and the borrowings paid down were under Noranda Aluminum Acquisition's senior secured term loan B and revolving credit facility.

The company recorded gains of $12 million on these repurchases, according to a news release announcing Noranda's preliminary results for the quarter.

Possible covenant breaches

Noranda expects that it will not meet some of the ratios required under the restrictive covenants on the notes and credit facilities.

There are no financial maintenance covenants on any of the company's borrowings, but meeting these ratios is a condition to the execution of certain transactions. Because of this, the company's ability to incur future debt, make acquisitions, make certain investments, pay dividends and retain proceeds from asset sales may be limited.

The company ended the second quarter with $1.1 billion of debt and $182.3 million in cash.

Noranda is a Franklin, Tenn.-based producer of value-added primary aluminum products as well as high quality rolled aluminum coils.

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