Kaiser Aluminum Corp. said Friday it expects to sell its 90-percent interest in the Volta Aluminium Co. (Valco) primary aluminum smelter in Ghana to the Republic of Ghana for between $35 million and $100 million by April 30, 2004.

Kaiser has executed a memorandum of understanding for the transaction, which a company spokesman said Kaiser sees as the first necessary step in completing the sale. The transaction would also include the assumption of all of Kaiser's liabilities and obligations related to Valco.

Kaiser on April 30 completely shut down Valco's primary aluminum production due to power shortages in Ghana, located in western Africa. The smelter has five potlines, or production lines, each with a 40,000 tonne capacity of output annually.

Because aluminum giant Alcoa Inc. owns 10 percent of Valco, the Republic of Ghana's purchase is subject to Alcoa's right of first refusal pursuant to Valco's corporate governance requirements, Kaiser said.

The memorandum of understanding specifies that the amount of the sale of Valco would be paid in 2004 and beyond.

During 2004, assuming the $35 million minimum amount, the Republic of Ghana would pay $7 million in cash to Kaiser and $18 million in cash to Valco, thereby reducing Kaiser's funding to Valco.

The rest, a minimum of $10 million, would be paid in cash to Kaiser over a five-year period from the closing date, Kaiser said.

The Republic of Ghana's obligations to Kaiser will be guaranteed by the Bank of Ghana, Kaiser added.

Valco's sale would be subject to due diligence and approvals by the President or Cabinet of the Republic of Ghana, the Parliament of Ghana, the boards of directors of Kaiser and of Valco, the U.S. Bankruptcy Court and the lenders under Kaiser's post-petition credit agreement, Kaiser said.

Kaiser Aluminum Signs MOU with Republic of Ghana to Sell Its 90% Interest in Valco

HOUSTON--Dec. 19, 2003--Kaiser Aluminum announced today that it has executed a Memorandum of Understanding (MOU) to sell its 90% interest in Volta Aluminium Company Limited (Valco), which owns and operates a primary aluminum smelter in Ghana, to the Republic of Ghana for consideration of between US$35 million and US$100 million, plus the assumption of all of Kaiser's related liabilities and obligations. The MOU contemplates that the transaction will close by April 30, 2004.

The consideration will be paid in 2004 and beyond. During 2004, assuming the US$35 million minimum consideration, the Republic of Ghana would pay US$7 million in cash to Kaiser and US$18 million in cash to Valco, thereby reducing Kaiser's funding to Valco. The remainder of the consideration (a minimum of US$10 million) will be paid in cash to Kaiser over a five-year period from the closing date. The Republic of Ghana's obligations to Kaiser will be guaranteed by the Bank of Ghana.

The transaction is subject to due diligence and a number of approvals, including by the President or Cabinet of the Republic of Ghana, the Parliament of Ghana, the Boards of Directors of Kaiser and of Valco, the U.S. Bankruptcy Court and the lenders under Kaiser's Post-Petition Credit Agreement. In addition, the purchase by the Republic of Ghana is subject to Alcoa's right of first refusal pursuant to Valco's corporate governance requirements.

Under the terms of the MOU, upon the execution of the MOU and the payment by the Republic of Ghana of US$7 million into escrow, the parties will suspend the pending international arbitration. Upon the closing of the transaction, the parties will dismiss the arbitration with prejudice.

"Kaiser and Ghana have been friends and business partners for 40 years. Ghana's industrialization in large part began with Kaiser's commitment to the building of the Akosombo power facility. Kaiser is pleased that the transaction provides the opportunity for Valco's majority ownership and economic potential to be transferred to the people of Ghana," said Kaiser President and Chief Executive Officer Jack A. Hockema.

Kaiser Aluminum (OTCBB:KLUCQ) is a leading producer of fabricated aluminum products, alumina, and primary aluminum.