ORMTQ Ormet Corp (CE)

On October 2, the Public Utilities Commission of Ohio (PUCO) denied the majority of Ormet’s request for an energy transition plan that would allow it to operate while constructing an onsite natural gas based power generation facility. Due to this decision, Ormet cannot emerge from bankruptcy and must immediately shut down operations. Ormet estimates that an additional 600 people will be affected under the existing WARN notice.

Ormet was forced to file for bankruptcy on February 25, 2013 due to historically low metal prices and exceedingly high and uncontrollable power costs. The Ohio Power industrial rate which establishes the base rate for Ormet to procure power has increased from $39.66 per MWh, when the Unique Arrangement was established in 2009, to $60.83/MWh in September 2013, an increase of over 53 percent. During the same period, wholesale power costs in the region have decreased by over 10 percent. The Unique Arrangement was created as an economic incentive to maintain and create jobs, which Ormet has successfully done to date. At full operations, Ormet’s projected 2014 energy cost would reflect an increase of $108 million, before the potential discount of $54 million as provided for in the PUCO ruling.

“The economic impact of PUCO’s decision is simply a restructuring of the existing economic incentives already pledged to Ormet for maintaining the jobs and does not address the continued rate increases from AEP. It is not sufficient to maintain, let alone increase, operating levels at Hannibal and begin construction of an onsite power plant. The Chairman and one of the Commissioners went out of their way to insult Ormet’s efforts to reduce costs. I want to set the record straight and recognize that the USW and secured creditors have coordinated in a collaborative effort with the Company to reduce the company’s financial liabilities by almost $300 million. The PUCO Commissioners never mentioned in their comments that Ohio’s energy policy transition to market has massively increased energy costs and is misguided, with its first major casualty being Ormet. How can this Administration justify an energy policy that puts thousands of people out of work?” said Mike Tanchuk, Chief Executive Officer and President of Ormet Corporation.

A restart of the Hannibal smelter in the future would be contingent upon obtaining a long term economical power supply, similar to that achieved by Century Aluminum in Kentucky, and an improving aluminum pricing environment.

Cautionary Statement

This Statement contains forward-looking statements that can be identified by use of words such as “anticipates,” “believes,” “estimates,” “expects,” “hopes,” “targets,” “should,” “forecast,” “outlook,” “projects” or other words of similar meaning. All statements that address the Company’s expectations or projections about the future, including statements about the Company’s strategy for growth, cost reduction goals, expenditures, financial results, liquidity and capital needs, are forward-looking statements. Forward-looking statements are based on the Company’s estimates, assumptions and expectations of future events and are subject to a number of risks and uncertainties and may or may not be realized. The Company cannot guarantee its future performance or results of operations. All forward-looking statements in this press release are based on information available to the Company on the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking statements, except as may be required by law. The Company’s business is subject to a number of significant risks and uncertainties, including the potential adverse impact of its Chapter 11 cases. Given the significant uncertainties and risks to which the Company is subject (a) the reader should not place undue reliance on forward-looking statements contained in this press release and (b) the Company’s future results could differ materially from the Company’s current results and from those anticipated in the Company’s forward-looking statements.

Ormet CorporationJames Burns Riley, 740-483-2602

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