HANNIBAL - Claiming Ormet Corp. is still almost $9 million behind on its electricity bills, American Electric Power is suing the aluminum producer in federal court.
The move could jeopardize the sale of Ormet to Minnesota-based Wayzata Investment Partners for $221 million because the deal is contingent upon a power agreement with the Public Utilities Commission of Ohio. Ormet filed for bankruptcy and restructuring in February.
According to a July 8 complaint filed in U.S. District Bankruptcy Court in Delaware, AEP subsidiary Ohio Power Co. is seeking to delay a new Ormet power agreement, largely because Ormet still owes $8.9 million worth of unpaid electricity bills.
Ormet Chief Executive Officer Mike Tanchuk, upon the company's June 4 announcement of the deal with Wayzata, said the company needed "suitable relief to the current power arrangement authorized by the PUCO" to complete the sale. Tanchuk could not be reached for further comment late Wednesday.
Last summer, Ormet issued a Worker Adjustment and Retraining Notification Act notice regarding the possibility of laying off 998 employees, including 837 union workers and 161 management workers. The W.A.R.N. notice expired Dec. 31. At the time, Tanchuk said Ormet's AEP bills were going to increase by about $20 million per year.
By a vote of 417-130, members of United Steelworkers Local 5724 at Ormet recently ratified a new contract with Wayzata. Those union steelworkers sent a letter supporting a new electricity agreement to the PUCO earlier this month.
"With a work force of 1,000 employees and an indirect link to thousands more in surrounding communities, I feel it is imperative that Ormet be allowed to modify its existing power agreement, allowing it to emerge from bankruptcy under new ownership," the letter states. "Ormet is by far the largest employer in rural Monroe County, providing a strong tax base for the county school systems. To lose these jobs and taxes would be devastating to our area."
Previously, the Washington, D.C.-based Pension Benefit Guaranty Corp. objected to the Wayzata deal, citing Ormet retirement plans that are underfunded by "over $235 million." Prior to Ormet's bankruptcy filing, PBGC officials confirmed Ormet had missed at least $1 million worth of required pension payments.