July 10, 1999

Kaiser, Maxxam problems compound

Bert Caldwell - The Spokesman-Review

The aftershocks of Tuesday's explosion at a Gramercy, La., alumina plant
continued to rattle Kaiser Aluminum and corporate parent Maxxam Corp.

The Standard & Poor's rating agency downgraded its outlook for Maxxam based
on difficult operating conditions not only for Kaiser, but also for its
Pacific Lumber subsidiary.

The blast at Gramercy will idle the plant for months, Kaiser officials say.
And Pacific, a major producer of redwood lumber, has been crimped by
difficulties getting harvest plans approved.

With Gramercy sidelined, prices of alumina, the raw material of aluminum,
spiked Friday.

But analyst Valid Fahti of ABN AMRO expects that to subside.

The question for Kaiser officials, he said, is whether to rebuild Gramercy
and -- if so -- how much modernization should be undertaken in the process.

"The company needs to make hard decisions here," he said.

Kaiser hasn't determined the cost of repairs, said spokesman Scott Lamb.

He said one of two workers listed as critical after the accident has been
taken off that list, and another less-severely injured worker has been
discharged from the hospital.

Although S&P affirmed its current ratings on Maxxam debt, the company
switched the outlook from positive to negative because of the uncertainty
about Gramercy's future and the direction of aluminum prices.

Maxxam spokesman Josh Reiss said the company was disappointed the outlook
was revised.

"We think the company is well-positioned to deliver long-term shareholder
value," he said.

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