Wise Metals, Crown might drop lawsuits

BUSINESS DIGEST

November 16, 2007|By Allison Connolly | Allison Connolly,SUN REPORTER

Wise Metals Group LLC has reached a tentative agreement that would bring back one of its biggest customers, ending a yearlong stalemate that resulted in the two suing each other over breach of contract.

Linthicum Heights-based Wise, the world's third-largest manufacturer of aluminum can stock for the food and beverage industry, said yesterday that it is working out a contract with Philadelphia-based Crown, Cork & Seal Co. Inc. that would expand their prior relationship and end the lawsuits.

Under the long-term contract, Wise would supply Crown in Europe and the Middle East as well as in the United States.

"We look forward to a strong relationship and partnership with Crown in the future," Wise Metals Group Chairman and Chief Executive Officer David D'Addario said in a statement.

In August 2006, Wise announced that it was losing the beverage can sheet business of Crown, one of the three largest manufacturers of aluminum cans in the world. At the time, Wise had been trying to negotiate price increases in existing contracts to compensate for rising aluminum and energy costs.

Crown represented 20 percent of Wise Metals' 2005 sales of $883.8 million. Crown agreed to continue buying sheet from Wise for its food products, which is a significantly smaller business.

Crown spokesman Michael F. Dunleavy said yesterday that he does not comment on contracts with the company's suppliers. Wise officials declined to comment beyond the announcement.

Last year, Wise posted a loss of $80.2 million, compared with a loss of $21.6 million a year earlier. Sales rose 15 percent to $1 billion from $883.8 million the previous year. The company is privately held but files financial reports with the Securities and Exchange Commission because its debt is publicly traded.

This week, the company filed for an extension on reporting its third-quarter results, saying it did not have enough time to prepare them after hiring a new accounting firm, PricewaterhouseCoopers LLC, in August. Wise dismissed Ernst & Young LLC that same month, saying that as of Dec. 31, 2006, the company did not maintain effective internal control over financial reporting, which resulted in a "material weakness."

Wise is expected to report third-quarter results Monday.

As of Dec. 31, the company employed 1,151 people, including 31 at its corporate headquarters in Linthicum Heights, in northern Anne Arundel County. Wise has a manufacturing plant in Muscle Shoals, Ala.

allison.connolly@baltsun.com

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