WEIRTON STEEL BANKRUPTCY Union fears loss of retiree health benefits

More than half of the steelmaker's debt is owed to retirees.
WEIRTON, W.Va. (AP) -- After 31 years in the mill, Frank McCaffrey believes the executives at Weirton Steel Corp. when they promise they will, in time, emerge from Chapter 11 bankruptcy a stronger, more competitive company.
"But at what price?" he wonders.
Like some leaders of the Independent Steelworkers Union, McCaffrey fears survival will come at the expense of the estimated 10,000 people who rely on the nation's No. 2 tin producer for health insurance.
"I don't want to see them sacrificed," McCaffrey said several hours after the steel maker filed for protection in U.S. Bankruptcy Court.
The company, located across the Ohio River from Steubenville, Ohio, is the Steubenville-Weirton area's largest employer. It has about 3,600 employees, including 1,100 Ohioans.
Years ago, retirees gave up higher wages for the promise of free, lifelong health care, McCaffrey said.
"Maybe the rest of the public can't understand that," McCaffrey said, "but we actually gave up as much as $10 to $15 an hour in lieu of a promised benefit."
Will PBGC intervene?
Now he worries the Pension Benefit Guaranty Corp. will intervene, seizing the steel maker's underfunded pension plan and eliminating the insurance that, to many, means more than the money.
"If the PBGC gets involved, you can pretty much kiss retiree health care goodbye," McCaffrey said.
More than half of Weirton Steel's $1.41 billion in debt is owed to retirees in pensions, health care and other benefits, the company's bankruptcy filing shows.
And intervention by the PBGC is a real possibility, said Mark Kaplan, Weirton's chief financial officer.
"I have real concerns that once the PBGC looks at our announcement, they may take action," Kaplan said. The agency has become more aggressive about seizing and protecting pension plans in the past two years, he said.
"It used to be an absolute last resort," he said, but the approach changed as the PBGC tried to avoid larger liabilities. If a bankrupt company puts people out of work en masse, the government's liability balloons because those workers are no longer leaving the workplace gradually, allowing pensions to be paid over time.
"What you've got to prove to them is you're not going to be worse off" by retaining control of the plan, Kaplan said.
Hard-hit industry
Some three dozen U.S. producers have filed for bankruptcy since early 1998, when imported steel began to flood the market at prices below the cost of production.
Though Weirton Steel had held on for several years while larger competitors fell, it was finally forced into bankruptcy to cope with the $700 million in losses it had accumulated in the last five years.
In its bankruptcy filing, Weirton Steel said it had about $654.5 million in assets and about $1.41 billion in debts as of March 31. The company now has a $225 million financing package to remain operational while it reorganizes.