HANNIBAL - A federal agency has the option to foreclose on some Ormet Corp. property because the aluminum producer has missed at least $1 million worth of required pension payments.
However, a spokesman for the Washington, D.C.-based Pension Benefit Guaranty Corp. said his organization is doing all it can to work with Ormet officials to ensure this does not happen.
"We could foreclose on the property to satisfy the amount owed," said Marc Hopkins, spokesman for the PBGC. "However, we want businesses to be able to fix their operations without encumbering their efforts."
File photo by Scott McCloskey
An Ormet Corp. employee works on a potline at the company’s Hannibal Primary Aluminum Reduction Plant.
Hopkins declined to specify the exact amount Ormet has failed to pay, but he confirmed it is more than $1 million. He also would not indicate how much property the PBGC would take if the agency elected to do so.
The PBGC insures the retirement incomes of more than 44 million Americans employed in the private sector. The agency originally gave Ormet until mid-February to come up with a solution after the company missed a pension contribution that was due Jan. 15. The company now has until Feb. 27 resolve the problem, but the deadline could be extended if both parties agree.
The PBGC is the same agency that recently took over responsibility for some RG Steel pension plans, following that company's bankruptcy and liquidation last year. The agency is also suing RG Steel owner, New York City-based Renco Group, for $97 million for allegedly trying to sell off assets to avoid its pension obligations.
Tom Byers, president of United Steelworkers Local 5724 at Ormet, was not available for comment Tuesday. Ormet Chief Executive Officer Mike Tanchuk and company spokesman James Riley also could not be reached.
The last eight months have been challenging for Ormet - one of the Upper Ohio Valley's largest employers. Last summer, Ormet issued a Worker Adjustment and Retraining Notification Act notice regarding the possibility of laying off 998 employees, including 837 union workers and 161 management employees. The WARN notice expired Dec. 31, meaning the company does not appear to be in position for such massive layoffs.
In addition to American Electric Power bills, which Tanchuk previously said were going to increase by about $20 million per year, company officials cited declining aluminum prices on the London Metal Exchange as the reasons for issuing the WARN notice.
The Public Utilities Commission of Ohio previously approved Ormet's request to defer paying electric bills that would be due for October and November in 17 monthly installments during 2014 and 2015. The company said these bills total about $27 million. As part of the deal, however, commission members stated that any further Ormet requests for help from the PUCO must include a "business plan confirming its long-term ability to exist without ratepayer support."
Byers collected more than 2,500 signatures for a petition and accompanying letter that he mailed to Gov. John Kasich, seeking his help to find a solution for Ormet.
"Ormet is a vital part of southeast Ohio's economy, and the administration has worked to encourage efforts among the independent stakeholders to craft a successful, sustainable future for the company and its employees," Rob Nichols, press secretary for Kasich.