Agreement Protects Pensions of 3,600 at Republic Engineered Steels
FOR IMMEDIATE RELEASE
November 04, 1998
The holding company for Republic Engineered Steels, Inc., Massillon, Ohio, has reached an agreement with the Pension Benefit Guaranty Corporation (PBGC) to provide $178 million in additional financing for Republic's underfunded pension plan. Blackstone Capital Partners II Merchant Banking Fund L.P. and Veritas Capital Partners L.P., private equity funds based in New York City, purchased the steel firm in September.
"In this transaction, Republic's new owners worked with PBGC to structure an agreement that puts retirement benefits of almost 3,600 steelworkers on a much stronger financial footing," said PBGC Executive Director David M. Strauss.
Under the agreement with PBGC, Republic Engineered Steels, Inc. will make an increased pension contribution of $27 million cash on or before January 31, 1999, plus $151 million in payments through 2003. A significant portion of the payments will be in excess of estimated minimum funding requirements. The agreement will end when Republic meets certain financial benchmarks, but no sooner than September 15, 2003.
Approval of a new five-year collective bargaining contract between the United Steelworkers of America and Republic was a condition of the sale of the firm to Blackstone-Veritas. The new contract significantly increased early retirement benefits that required funding which the agreement provides.
Republic Engineered Steels has operations in Ohio, Pennsylvania, Connecticut, Maryland, Indiana and Illinois.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by some 42 million American workers and retirees participating in about 45,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.
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PBGC No. 99-06