Employees and retirees of Ormet Corp. will have to wait to see if the company is sold for $221 million because the sales hearing that had been set for Wednesday was canceled.
Following Ormet's restructuring filing in U.S. Bankruptcy Court in Delaware earlier this year, a hearing to allow the company to be sold to Wayzata Investment Partners was originally set for May 15. However, that hearing was rescheduled for Wednesday when the Washington, D.C.-based Pension Benefit Guaranty Corp. objected to the sale, citing Ormet retirement plans that are underfunded by ''over $235 million.''
With objections still needing to be resolved, the hearing for Ormet to be sold to Smelter Acquisition LLC, a Wayzata subsidiary, is rescheduled for 2 p.m. June 3.
The PBGC insures the retirement incomes of more than 44 million Americans employed in the private sector.
When an underfunded pension plan terminates, this agency generally takes over the plan. 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.
After his company filed for restructuring in February, Ormet Chief Executive Officer and President Mike Tanchuk said the aluminum producer hoped to be purchased by Minnesota-based Wayzata. Though Ormet has found ways to deal with much of its debt, the major reason for the bankruptcy involves pension costs, he said.
Prior to Ormet's bankruptcy filing, PBGC officials confirmed Ormet recently had missed at least $1 million worth of required pension payments.
By a vote of 417-130, members of United Steelworkers Local 5724 at Ormet recently ratified a new contract with Wayzata.
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 workers.
The WARN notice expired Dec. 31. At the time, Tanchuk said Ormet's American Electric Power bills were going to increase by about $20 million per year.
According to the PBGC objection, the agency believes AEP bills represent as much as one-third of Ormet's overall expenses.