Allied Holdings outlines proposed Teamsters contract changes, says strike would shut down company

By Caroline Salls

Pittsburgh, Feb. 7 - Allied Holdings, Inc. outlined the terms of its proposed five-year agreement with the U.S. Teamsters in connection with its motion to reject its collective bargaining agreement, according to a transcript of a conference call included in an 8-K filing with the Securities and Exchange Commission.

According to the filing, the proposed changes to the current collective bargaining agreement will allow the company to reinvest in its aging fleet and slow the loss of business to competitors.

Despite negotiations that have been ongoing since March, Allied said the Teamsters have thus far been unwilling to agree to the needed contract changes, and, if the U.S. Bankruptcy Court for the Northern District of Illinois approves Allied's motion to reject the Teamsters' CBA, the company will implement its most current contract proposal.

In addition, Allied said in the filing that if the U.S. Teamster employees choose to strike, the company will be forced to shut down.

The proposed modifications to the current collective bargaining agreement would include:

• Elimination of all future wage increases, all cost of living adjustments and all increases in pension and health and welfare contribution rates in the current CBA;

• Implementation of a 2.8% wage reduction in all wage elements. Wages would remain frozen at the reduced level for the first four years of the new CBA; at the beginning of the fifth year, wages would be returned to their current level;

• Establishing a health plan administered by Allied with substantially identical levels of coverage to those provided to non-bargaining employees of Allied;

Bargaining employees represented by the Teamsters would have the option of participating in the health plan and would contribute to the premiums for this plan at the same rate as Allied's non-bargaining employees in the U.S.;

• Establishing a 401(k) or other similar retirement savings plan in which Allied's bargaining employees represented by the Teamsters may participate.

Allied would make a monthly contribution equal to 2% of the employee's monthly gross wages; in addition, Allied would cease contributions to all pension plans in which Teamsters-represented employees participate; and

• Implementation of several important operational changes.

A hearing on rejection of the current CBA is scheduled for Feb. 20.

Allied, a Decatur, Ga., distributor of new and used vehicles, filed for bankruptcy on Aug. 1, 2005. Its Chapter 11 case number is 05-12515.

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