May 18 (Bloomberg) -- Alcan Inc., the world's second-largest aluminum maker, is seeking to renegotiate terms of an agreement reached with antitrust regulators to win approval of its 4 billion euro ($4.8 billion) purchase of France's Pechiney SA in February.

Alcan Chief Executive Travis Engen wants to keep assets he agreed to divest -- Pechiney's Ravenswood, West Virginia, rolling mill, a supplier to Airbus SAS and Boeing Co.; and a French mill that serves European automakers. Instead, he plans to spin off most of the company's rolling-mill assets and focus on developing low- cost alumina and primary aluminum as well as specialty packaging, aerospace and engineered products.

``We don't think a rejection of the plan is likely at all,'' Engen said on a conference call. ``We've had close examinations of antitrust issues. We think this is something with precedence and expect it to be approved by regulators. This transaction may have some alternative solutions in dealing with the U.S. regulations.''

U.S. Justice Department spokeswoman Gina Talamona didn't return calls seeking comment on the proposal.

Ravenswood, which makes aluminum skins for jetliner wings and fuselages, will benefit from a pickup in commercial-aircraft orders. Last week, Airbus said it is seeing signs of recovery as some airlines move up delivery dates of ordered aircraft. Last month, Boeing boosted its 2004 and 2005 profit forecasts because it now expects to deliver more aircraft next year.

Ups and Downs

``Ravenswood has a large aerospace market and we are coming out of a down cycle in aerospace,'' said metals analyst Mark Parr an analyst at KeyBanc Capital Markets. ``If we are at the beginning of an upturn in aerospace, it could move up for another five years.''

Alcan, based in Montreal, was required to divest the Ravenswood mill because some non-aerospace products made there are also produced at its mill in Oswego, New York, allowing it to potentially dominate the market in those products, which weren't named. The mill also makes wing parts and fuselages for Airbus and Boeing, the two largest commercial-aircraft makers.

Until the new plan is approved, Ravenswood remains for sale, Engen said.

Alcan shares rose C$1.68, or 3.3 percent, to C$53.18 on the Toronto Stock Exchange. They have fallen 12 percent this year.

Antitrust Laws

The new company will have annual sales of $6 billion and about 10,000 employees. Alcan will have $20 billion in revenue and 78,000 workers after the spinoff, which it expects to complete by year's end. Aluminum rolled products include aluminum sheet, used in the construction and the automotive industries, aluminum beverage cans and foil.

Alcan's takeover of Pechiney was approved by antitrust authorities in the U.S. and Europe after the company agreed to sell Ravenswood and either its Neuf Brisach plant in France or Dorf plant in Germany to comply with regulations.

The Neuf Brisach and Ravenswood plants will remain part of Alcan in the spinoff plan. It would also keep three other rolling mills that serve aerospace, automotive and foil customers.

``They're keeping a lot of their engineering mills, where they clearly see research and development potential,'' said Raju Daswani, head of research & consultancy at Metal Bulletin Research. ``Clearly they've segmented aerospace as an industry worth pursuing.''

Brian Sturgell, 54, who has been with Alcan for 15 years, will become chief executive officer of the new company. Ted Newall, 68, an Alcan board member since 1986, will be chairman. The company, yet to be named, will be based in Canada and run from Cleveland. It will be listed on the New York and Toronto stock exchanges, the company said in a statement.

Debt

Alcan plans to shift much of its debt to the new company, where it will be refinanced, improving Alcan's credit profile, the company said.

Including the purchase of Pechiney, Alcan had total debt of $9.76 billion last year, almost double what it was in 2002. Alcan has a rating of A- from Standard & Poor's and a Baa1 rating from Moody's Investors Service. Executives are scheduled to meet with both in coming months to discuss ratings improvement for Alcan and a new rating for the spinoff, Chief Financial Officer Geoffery Merszei said on the call.

``The spinoff will accelerate the reduction of debt and we expect a positive response to the structure of the new company,'' he said. ``The rating of the new company will be determined in the next few months as we consult with the credit rating agencies.''

Merszei wouldn't say what the respective debt loads would be after the companies were split.

To contact the reporters on this story: Matthew Craze at mcraze@bloomberg.net; James Gunsalus in Princeton at jgunsalus@bloomberg.net.

Last Updated: May 18, 2004 16:22 EDT