Steelworkers oppose Ormet's funding agreement with MatlinPatterson

New York, Sept. 24 - The United Steelworkers of America said Ormet Corp.'s funding agreement with MatlinPatterson Global Advisors LLC should be thrown out by the bankruptcy court as the reorganization plan on which the agreement is based is "unrealistic."

In order to close on the new funding, Ormet must reach new collective bargaining agreements with the USWA no less favorably than the March 2004 proposals, the steelworkers note in a filing Friday with the U.S. Bankruptcy Court for the Southern District of Ohio.

But the union said it has already told Ormet that "neither the predictably unacceptable March 2004 proposal nor anything like it will ever form the basis for collective bargaining agreements with the USWA."

"Any attempt by the company to unilaterally implement terms and conditions of employment based upon that proposal will be met with an immediate work stoppage," the union added.

However even if Ormet cannot negotiate a new agreement MatlinPatterson will still receive a $1.05 million termination fee plus reimbursement of fees and expenses, the USWA said. Meanwhile, various executives including Emmett Boyle will be retained.

"Authorizing the debtors to pay such a large fee offers no incentive to the debtors, MatlinPatterson, or Boyle, regardless of which hat he is wearing, to conclude a labor agreement with the USWA on consensual terms. For that reason alone, the instant motion should be denied," the USWA said in the filing.

As part of Ormet's proposed reorganization, MatlinPatterson has agreed to buy $30 million of new 11% term notes. As part of the deal, Ormet will pay MatlinPatterson a $900,000 commitment fee for the new term notes.

MatlinPatterson holds more than $100 million of old debt claims. It will own about 31% of the reorganized company's stock if the plan goes through.

Holders of Ormet's old 11% senior notes due 2008, $75 million of floating-rate term loans and general unsecured claims will get an estimated recovery of 25.3%, according to the company's disclosure statement.

A hearing on the disclosure statement is scheduled for Sept. 29.

Ormet filed for bankruptcy on Jan. 30 citing low prices for aluminum and high production costs. Its Chapter 11 case number is 04-51255.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.