Workers caught in benefits battle

By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
YOUNGSTOWN -- Lenders are threatening to pull the plug on health benefits soon for 1,300 hourly CSC Ltd. employees, most of them already laid off, and 1,660 retirees.
CSC managers reached an agreement with the company's lenders Thursday that allows continued payment of health benefits and supplemental unemployment pay only through the end of next week.
The pact also provides for a gradual wind-down of operations and mothballing, to terminate April 13.
CSC attorney Matthew Goldman said the company believes it is obligated to continue paying for the benefits under terms of its collective bargaining agreements with Steelworkers Local 2243 and two smaller unions at the plant as long as hourly workers are employed.
"The lenders do not agree," the Cleveland attorney said.
Costs: Goldman acknowledged that the cost is high. CSC pays $170,000 a week to Anthem Blue Cross/Blue Shield for hourly workers' health benefits. Salaried employees lose their benefits when they are laid off.
Ronald Hanson, the Chicago attorney representing the lenders, said CSC has earned $10 million in sales since it filed for Chapter 11 bankruptcy protection Jan. 12 and spent $3 million of it on health and supplemental pay benefits.
"It's a huge, huge expense, and we can't continue to pay it," Hanson told Judge William T. Bodoh.
The judge set a hearing for 2:30 p.m. Thursday to discuss CSC management's request that the benefits be paid through April 13.
Negotiating: CSC managers have been negotiating with lenders for weeks, pleading for approval to continue to process and sell its inventory and to use sale proceeds to fund operations. The mill has been running on a day-to-day basis since its last, lender-approved budget expired March 9.
Don Caiazza, a CSC spokesman, said workers expect to finish processing steel today because they've used up most of the salable inventory.
The work force will be down to about 85 next week -- 50 hourly and 35 salaried workers -- most preparing equipment for long-term storage. About 80 hourly and 49 salaried workers were scheduled this week.
Workers stopped melting steel weeks ago, but they processed and shipped about 3,800 tons of stockpiled inventory over the past two weeks.
CSC has contracted with the Cleveland office of McDonald Investments to search for a buyer for the massive bar mill and officials have said that at least two or three prospective buyers have expressed interest.
Attorneys for CSC and for the lenders both acknowledged Thursday, however, that a piecemeal liquidation could also occur.
Agreement: The company's latest agreement with the lenders includes plans to hire a management expert to coordinate the mothballing process and a liquidation expert to help with auctioning off the plant piece by piece if a buyer can't be found to keep the mill intact and operating.
"Make no mistake, the lenders preference is an in-place sale," Hanson said. "But the reality is, McDonald Investments has been seeking a buyer since August, and we must be prepared for the alternative."
Hanson said the banks and lending institutions want the management expert to ensure that the mothballed equipment doesn't need a constant work force and constant maintenance.
"Let's hope the managers can work on getting a buyer to sign a letter of intent," he said. "From what we keep hearing, there are expressions of interest."
Hearing: A CSC creditors' Section 341 hearing is scheduled for 10 a.m. Wednesday in the Ohio Room of Kilcawley Center, Youngstown State University.
The hearing will give creditors a chance to hear company officials testify under oath about the company's financial problems and the events that led to the bankruptcy filing.