Bethlehem formally asked in a letter to the bankruptcy court for approval to terminate the benefits now covering about 95,000 people effective March 31.
The company is making the move “because we cannot pay the obligations for retiree health and life insurance now or in the future. Due to our financial situation and our impending sale of substantially all of our assets to International Steel Group (ISG), we must seek the court’s approval to terminate these benefits. We find this decision extremely difficult, but unavoidable, and sincerely regret that circumstances have led us to this decision,” Bethlehem chairman and chief executive officer Robert Miller said in a statement.
The company said that at the same time, it is also trying to arrange for “affordable” health and life insurance for its current and future retirees.
Workers Would Foot the Whole Bill
Currently, Bethlehem Steel is speaking with several health care vendors to solicit proposals for voluntary insurance programs for our eligible retired populations in which the retirees foot the entire bill. “Although Bethlehem will not be contributing any monies to such new coverages, we believe the size of our retiree population will help us find affordable rates for those persons interested in purchasing those plans,” Miller said in the statement.
Bethlehem Steel’s executive management and financial advisers agreed on February 4 to recommend the sale of substantially all of Bethlehem’s assets to ISG of Cleveland, Ohio. Bethlehem’s board will consider that sale in a vote on February 8. If approved, Bethlehem and ISG will then complete an asset purchase agreement, which is expected to be submitted to Bethlehem’s bankruptcy judge in about one to two weeks.
As part of the agreement, neither company has agreed to assume retiree health or life insurance obligations, which averaged more than $19 million each month in 2002. The corporation’s aggregate actuarial obligations for all future retiree welfare benefits for its current retirees and eligible dependents is about $3 billion, the Bethlehem statement said