REAL ALLOY - Real Industry Inc.

• 11/17/17 Recap: This one is going to be a snorer for those of you who don't like to geek out over the technical intricacies of commodities businesses. Here, REAL ALLOY is a publicly-traded holding company ($RELY) that leverages its substantial net operating losses to improve the free cash flow position of various undervalued businesses that it acquires. The company acquired Real Industry in 2015 from Aleris Corporation (formerly bankrupt) for $554.5mm, substantially leveraging its balance sheet in the process. Post-acquisition, Real Alloy became one of the largest aluminum recyclers in North America and Europe with products and services availed to wrought alloy processers, automotive original equipment manufacturers (read: big car companies), foundries and casters. In other words, the company serves the automotive, consumer packaging, aerospace, building and construction, steel and durable goods industries by processing new scrap, old scrap, and various aluminum byproducts. All of this puts the company squarely into the aluminum recycling supply chain. The company blames the filing on weakness in the steel industry, the strong U.S. dollar creating arbitrage opportunity, operational setbacks (heightened, to some degree, by Hurricane Harvey), and a reduction in credit insurance and tightening supplier terms. The company is seeking approval of a $365mm DIP credit facility to facilitate the case wherein it hopes to preserve the value of its NOLs and pursue a transaction with a new strategic partner.  
• Jurisdiction: D. of Delaware 
• Capital Structure: $96mm ABL (Bank of America, NA), $305mm '19 10% senior secured notes (Wilmington Trust, NA)  
• Company Professionals:
  • Legal: Morrison & Foerster LLP (Gary Lee, Todd Goren, Mark Lightner, Benjamin Butterfield, J. Alexander Lawrence, Geoffrey Peck) & (local) Saul Ewing Arnstein & Lehr LLP (Mark Minuti, Monique Bair DiSabatino, Sharon Levine)
  • Financial Advisor: Berkeley Research Group LLC
  • Investment Banker: Jefferies LLC
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Ad Hoc Noteholder Group
    • Legal: Latham & Watkins LLP (Richard Levy, Jason Gott, Ted Dillman) & (local) Young Conaway Stargatt & Taylor LLP (MIchael Nestor, Kara Hammond Coyle)

Updated 11/17/17