UPDATE 1-Aleris seeks court approval to cancel contracts with GM

* Seeks court approval to cancel contract with General Motors
* Says "very concerned" about payment terms in contracts

By Santosh Nadgir
BANGALORE, March 2 (Reuters) - Aleris International Inc
[TXPACA.UL], which filed for bankruptcy last month, has sought
approval from a U.S. bankruptcy court to reject four purchase
contracts with General Motors , saying it was "very
concerned" about the extended payment terms in the contracts.
In a motion filed late last week, the company said it's
subsidiary, Alchem Aluminum Inc, was supposed to start shipping
certain aluminum and silicon products to General Motors from
March 1, 2009.
"Given GM's public pronouncements about the current state of
their finances and the widely known difficulties facing the
automobile industry, the debtors (Aleris) are very concerned
about the extended terms set forth in the contracts," the filing
said.
Aleris added that it was not even sure if GM would be able to
pay for the materials on the due date and the cost of preparing
the shipment had created an economic risk that was not justified
by the benefits of the contract.
The decision to reject the contract is a sound exercise of
business judgement, it said. Under U.S. bankruptcy rules, a
bankrupt company can reject executory contracts, such as this,
subject to court approval.
Aleris, which makes aluminum rolled products and is owned by
an affiliate of private equity firm TPG [TPG.UL], filed for
Chapter 11 bankruptcy protection in February citing decreased
demand for aluminum amid a downturn and a heavy debt load.
The case is In re: Aleris International Inc, No 09-10478,
U.S. Bankruptcy Court, District of Delaware.
(Editing by Jarshad Kakkrakandy)
((santosh.nadgir@thomsonreuters.com; within U.S +1 646 223 8780;
Outside U.S +91 080 4135 5800; Reuters messaging:
santosh.nadgir.reuters.com@reuters.net))

Keywords: ALERIS/

(C) Reuters 2009. All rights reserved. Republication or redistribution of
Reuters content, including by caching, framing or similar means, is expressly
prohibited without the prior written consent of Reuters. Reuters and the Reuters
sphere logo are registered trademarks and trademarks of the Reuters group of
companies around the world.

nBNG470953