Government Takes Over WHX Pensions
Mar. 07, 2003
CHARLESTON, W.Va. (AP) _ The federal government on Friday took over WHX Corp.'s pension plan, which covers 9,400 current or retired workers at two subsidiaries, including bankrupt Wheeling-Pittsburgh Steel Corp., the nation's eighth biggest integrated steel producer.
Steven A. Kandarian, director of the federal Pension Benefit Guaranty Corp., said New York-based WHX's pension plan has $300 million in assets and but more than $443 million in liabilities.
The pension fund also covers subsidiary Handy and Harman, a metal manufacturer based in Rye, N.Y. Wheeling-Pitt, WHX's principal subsidiary, is based in Wheeling.
The federal program will be liable for about $65 million in benefits owed to retirees, but that figure could balloon to as much as $378 million, Kandarian said.
Wheeling-Pitt president James G. Bradley said Friday that the federal government acted too hastily and did not notify the company of its plans.
``The announcement today is not a reflection of our long-term business plan for emerging from bankruptcy,'' said Bradley. ``I believe this action is nothing more than the PBGC taking pre-emptive action ... in order to limit its potential future liabilities.''
WHX officials were not immediately available for comment Friday.
WHX stock tumbled 77 cents, or 42.8 percent, to $1.03 on the New York Stock Exchange.
Wheeling-Pitt filed for Chapter 11 bankruptcy protection in November 2000. Last week, the federal Emergency Steel Loan Guarantee Board rejected the steelmaker's joint application with the Royal Bank of Canada for a $250 million loan that was key to emerging from bankruptcy.
The board said it was unconvinced Wheeling-Pitt has the earning potential to repay the loan.
Bradley said the company plans to file an amended application with the Emergency Steel Loan Board.
Since the November 2000 bankruptcy filing, Wheeling-Pitt has cut more than 700 jobs through attrition and layoffs. The company employs about 3,800 workers at plants in Follansbee and Beech Bottom, in Allenport, Pa., and in the Ohio towns of Steubenville, Mingo Junction, Canfield, Yorkville and Martins Ferry.
PBGC spokesman Jeffrey Speicher said Wheeling-Pitt's failure to obtain the $250 million loan package was a factor in the federal takeover of WHX's pension plan.
Wheeling-Pitt's current pension plan was created in 1997 and Handy & Harman's plan was merged with it in 1998, Kandarian said.
``PBGC, as the insurer of the benefits plan, analyzed the financial situation of the company and we certainly looked at all factors that would contribute to their ability to maintain the plant,'' Speicher said. ``The plan is considered ended as of today.''
Bernie Ravasio, president of United Steelworkers of America Local 1190 in Steubenville, Ohio, said he was shocked by the PBGC's announcement. He said he planned to ask the union's legal department if the federal takeover is legal, contending that the plan is fully funded.
Leo Gerard, president of the United Steelworkers of America, called the pension takeover, ``a blindside attack on (workers') retirement security.''
Some three dozen domestic steel companies have filed for bankruptcy and many have gone out of business since 1998, when low-priced imports began flooding the U.S. market.
Since Oct. 1, 2001, the PBGC has assumed more than $8 billion in claims from struggling steel companies, including Bethlehem Steel, LTV Steel and National Steel.
The maximum guaranteed annual pension through the PBGC for workers retiring this year at 65 is $43,977.
``The PBGC's insurance guarantees will protect the basic pension benefits of workers and retirees in the WHX pension plan,'' Kandarian said.