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Naomi Rovnick

Asia Aluminum Holdings, which is in a fierce restructuring battle with its western lenders, will receive a last-minute rescue bid from Fortune 500 aluminium giant Norsk Hydro.
The Norwegian firm has hired BOC International Holdings to advise it on the deal and intends to pay more than US$300 million for the troubled mainland company. It will make its offer on June 29.
The offer would be substantially higher than the one already on the table from Asia  Aluminum's management team but it could founder on stiff political opposition on the mainland.
Asia Aluminum collapsed into provisional liquidation in March, owing US$985 million to foreign bondholders and hedge funds and HK$2.7 billion to mainland banks.
Members of Asia Aluminum's management team have offered to buy the company from liquidator Ferrier Hodgson for US$297 million after debts are paid.
The Norwegian company's interest has raised the hackles of the Zhaoqing government, which wants an end to Asia Aluminum's long restructuring to reassure the company's staff and suppliers.
The government is supporting the management buyout. It wrote to Asia Aluminum's creditors yesterday urging them not to back Norsk Hydro's offer.
The mainland company employs 10,000 staff in Zhaoqing and is many local businesses' largest customer. It has been struggling to do a deal with its lenders since February.
But foreign lenders were incensed by the Asia Aluminum management's offer. It proposes to pay them between one and 20 cents in every dollar they lent Asia Aluminum. Mainland banks, however, would get most of their money back.
Hedge funds, which bought payment-in-kind notes from Asia Aluminum, are the most angry. They would receive one cent in the dollar from the management team.
Norsk Hydro was encouraged to bid for Asia Aluminum by KPMG, the accounting firm the hedge funds have employed to get a better deal for them.
Bondholders are offered about 20 cents.
Payment-in-kind notes are loans that pay very high interest but carry few legal rights in restructurings.
The Norwegian firm, which is valued at  43 billion Norwegian kroner (HK$52.35 billion), has not valued the  mainland company formally because it has not seen its factories.  
A source close to the hedge funds said they expected Norsk Hydro to pay more than Asia Aluminum's management.
Zhaoqing officials are threatening to plunge Asia Aluminum into bankruptcy, which could see foreign creditors end up with nothing, if they do not accept the management buyout by June 30.
But Norsk Hydro has told Asia Aluminum's creditors it will launch its bid on June 29.
Spokesmen for Norsk Hydro, Asia Aluminum and BOC International could not be reached.



Asia Aluminum may receive rescue offer from Norsk Hydro