Wheeling-Pittsburgh Steel Corp., seeking to protect its remaining cash reserves, yesterday sought court approval to scrap its pension plan retroactively as of April 15, the day before the steel company filed a petition for protection under the bankruptcy laws.
The company's move may put it in conflict with the federal Pension Benefit Guaranty Corp., which will take over most of the pension obligations of Wheeling-Pittsburgh when the plan is terminated, industry sources said. A corporation spokesman had no comment on the steel company's move.
A key issue raised yesterday is the timing of the termination of the plan. That in turn affects the pension corporation's access to the steel company's assets. Under the law, the PBGC is entitled to claim up to 30 percent of Wheeling-Pittsburgh's net worth to meet the pension obligations it would assume.
If Wheeling-Pittsburgh succeeds with its petition, filed yesterday in U.S. District Court in Pittsburgh, and the PBGC takes over the steel company's pension plan as of April 15, the agency would join the steel company's other unsecured creditors who are waiting to find out how much of their claims will be paid, a company spokesman said. Payment is being held up while Wheeling-Pittsburgh tries to work out a new financing and operating plan under Chapter 11 of the bankruptcy act. The company has until the end of 1987 to propose plan that meets the approval of courts and creditors.
But if the court sets the termination date of Wheeling-Pittsburgh's pension plan after its bankruptcy filing, the PBGC could immediately claim some of the steel company's current cash and assets to cover the pension liabilities, a Wheeling-Pittsburgh spokesman said.
The company's move yesterday "would save us millions," the spokesman said. "We need the money."
Steelworkers at Wheeling-Pittsburgh will tally votes next week on a new contract that sets labor costs at $18 an hour, with a potential for $1 more if steel prices rise sufficiently. The company and union negotiators say the tentative contract is the last chance to end a strike that has idled the company since July 21, and to get its plants operating again.