HANNIBAL - Citing retirement plans that are underfunded by "over $235 million," the federal Pension Benefit Guaranty Corp. is objecting to Ormet Corp.'s sale to Wayzata Investment Partners.
Therefore, the sales hearing that had been set for today in U.S. Bankruptcy Court in Delaware has been delayed until 11:30 a.m. May 22, according to court documents. Ormet is set to be sold to Smelter Acquisition LLC, a Wayzata subsidiary, for $221 million.
The Washington, D.C.-based 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. The agency is also suing RG Steel's owner, New York City-based Renco Group, for $97 million for allegedly trying to sell off assets to avoid its pension obligations.
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. Although 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 owed at least $1 million worth of required pension payments.