Ormet Corp. employees should learn today if the company's sale to a subsidiary of Wayzata Investment Partners for $221 million will be finalized.
After Ormet filed for restructuring in U.S. Bankruptcy Court in Delaware during 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.
Prior to the bankruptcy filing, officials with the Washington, D.C.-based Pension Benefit Guaranty Corp. confirmed Ormet owed at least $1 million worth of required pension payments.
A hearing to approve the sale of Ormet Corp. to a subsidiary of Wayzata Investment Partners will take place in U.S. Bankruptcy Court in Delaware today. (Photo by Casey Junkins)
"It simply is not feasible for us to continue funding pensions like this," Tanchuk said previously. "We have addressed most of the major cost issues we are facing, but we need to deal with this pension liability."
According to federal court documents, the hearing will take place at 10:30 a.m. today to possibly approve the sale of Ormet to Smelter Acquisition LLC, which is a Wayzata subsidiary.
Tanchuk has acknowledged the company's high level of debt and legacy costs have been obstacles to achieving profitability. He said relatively low aluminum prices on the London Metal Exchange, combined with increased electricity rates, have made it impossible for Ormet to continue on its current course. Members of United Steelworkers Local 5724 at Ormet recently ratified a new contract with Wayzata.
It has been a challenging year for both union and management employees at the longtime aluminum producer along Ohio 7 in Monroe County. 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.
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 Ormet's electricity rate debate continues with the PUCO and AEP, the Ohio Consumers' Counsel questioned the rate discount plan Ormet got from AEP in July 2009 for a period of 10 years. The organization believes other AEP customers ultimately will have to pay more than $305 million in higher rates over the 10-year period in order for Ormet to receive lower power rates.