Court Approves AK Steel VEBA Settlement with Middletown Retirees
02/22/2008 - The U.S. District Court in Cincinnati approves an agreement between AK Steel and a group of retirees from its Middletown Works that resulted in establishment of a Voluntary Employees Beneficiary Association trust covering approximately 4900 current Middletown Works retirees.
The United States District Court in Cincinnati has approved an agreement between AK Steel and a group of retirees from its Middletown Works to settle a lawsuit stemming from the company's initiatives in 2006 to reduce its health care costs.
The settlement agreement established a Voluntary Employees Beneficiary Association (VEBA) trust, covering approximately 4900 current Middletown Works retirees. During their employment with the company, the retirees had been represented by the AEIF independent labor union, or its successor union, the IAM.
The settlement, which was reached on October 8, 2007, was subject to approval by the court. "We are very pleased that the court has approved this landmark agreement," said James L. Wainscott, Chairman, President and CEO of AK Steel. "The court's approval allows the parties to establish an innovative VEBA trust to fund the health care benefits for this group of retirees."
Under terms of the agreement, AK Steel will fund the VEBA trust and transfer all of its retiree health care (OPEB) obligations for the covered retirees to the trust. The trust will be managed solely by the retirees' designees and will be utilized to fund the retirees' covered benefits.
In exchange for the funding, AK Steel will have no further liability related to the Middletown Works retirees covered by the agreement. The company said that the settlement will reduce its total current OPEB liability of approximately $2 billion by about one-half.
AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, appliance, construction and electrical power generation and distribution markets. The company employs about 6500 men and women in Middletown, Mansfield, Coshocton and Zanesville, Ohio; Butler, Pa.; Ashland, Ky.; Rockport, Ind.; and its corporate headquarters in West Chester, Ohio.
AK Tube LLC, a wholly owned subsidiary of AK Steel, employs about 300 men and women in plants in Walbridge, Ohio, and Columbus, Ind. AK Tube produces carbon and stainless electric resistance welded (ERW) tubular steel products for truck, automotive and other markets.
