Deadine for Ormet deal approaches
HANNIBAL – United Steelworkers District 1 Director Dave McCall said Ormet Corp. has until Wednesday to complete its sale, which is in jeopardy because of an ongoing rate dispute with American Electric Power.
At the same time, many who are drawing pensions from Ormet also have objected to a provision of the planned $221 million sale to Wayzata Investment Partners, citing reductions in monthly pay and benefits if the retirement plans fall under the auspices of the federal Pension Benefit Guaranty Corp.
There are several factors at play that will determine the future of Monroe County’s largest private employer and taxpayer, which now has the authority to shut down the entire Hannibal plant as part of its ongoing bankruptcy and power supply dealings.
“Ormet receives a significantly discounted electric price and, in spite of that, the aluminum market is so difficult they are in bankruptcy,” said AEP spokesman Jeff Rennie.
“Ormet has found it more and more difficult to profitably run its business and has looked to AEP Ohio and the state of Ohio to reduce energy costs through a subsidy paid for by other AEP Ohio customers,” Rennie added.
Last summer, Ormet issued a Worker Adjustment and Retraining Notification Act notice regarding the possibility of laying off 998 employees, but the notice expired Dec. 31. At the time, Ormet Chief Executive Officer Mike Tanchuk said the company’s AEP bills were going to increase by about $20 million per year.
Ormet company officials could not be reached for comment.
In February, Ormet filed for restructuring in U.S. Bankruptcy Court in Delaware. In June, the aluminum producer reached the sales agreement with Wayzata. USW members at Ormet then voted 417-130 to accept the contract offered to them by Wayzata.
However, Ormet’s sale to Wayzata is contingent upon reaching an agreement for reduced AEP rates, a matter that now lies before the Public Utilities Commission of Ohio. Commission spokesman Jason Gilham said there is a PUCO meeting scheduled for Wednesday – which is the same day McCall said Ormet’s bankruptcy must be finalized in the Delaware court – to discuss Ormet’s contentions with AEP. Gilham said the commission may or may not rule on the Ormet matter during the meeting.
“We are continuing to work with the company. We have expedited the process as much as we can,” he said.
In his letter to the PUCO outlining the problems Ormet faces, McCall said if the commission fails to grant the company lower AEP rates, the results could be “horrific financial consequences for Ormet employees, retirees and the community.”
Earlier this month, AEP subsidiary Ohio Power Co. sued Ormet in the same federal court that is hearing Ormet’s bankruptcy case, stating the aluminum company still owes $8.9 million worth of unpaid bills. Rennie said AEP did this to get the court to address the concerns, but the court decided to wait until the PUCO makes a decision.
Previously, the Washington, D.C.-based PBGC objected to the Wayzata deal, citing Ormet retirement plans that were underfunded by “over $235 million.”
Prior to Ormet’s bankruptcy filing, PBGC officials confirmed Ormet had missed at least $1 million worth of required pension payments.
McCall wrote in his letter to the PUCO that for every one Ormet employee, there are five pensioners who “also depend on Ormet for their income and their health care.” Tanchuk has made it clear that the company cannot handle its pension debt.
There are several objection letters filed by pensioners recorded in the Delaware bankruptcy court, including one from Thomas J. Gribben of Wheeling.
“I object to any action which may result in the reduction of the amount of the monthly pension payment I am now receiving from Ormet Corp.,” he wrote.
“I object to the termination of my pension,” wrote Anna May Kovalick of Hazle Township, Pa., in another letter.