DETROIT -- Tower Automotive Inc. revealed Thursday that it will pay about $35 million to cover future benefits costs for its retired salaried employees and workers at its closed Milwaukee plant.
Tower said it will make two payments totaling $5 million to a fund to cover future benefits costs for its approximately 200 salaried retirees and their dependents. The first payment of a cash amount would be July 1. The second payment could include cash or equity when Tower emerges from Chapter 11 bankruptcy protection.
The supplier did not specify the amounts of the payments in its news release. It would pay current benefits through June 30. If the company doesn't emerge from Chapter 11 by July 1, it said it would continue to make supplemental cash payments to the fund until its reorganization is complete.
Tower spokesman Joe Kirik told Automotive News that the supplier hopes to emerge from Chapter 11 this summer.
In a separate agreement with its Milwaukee workers, Tower said it would contribute $30 million in equity in the reorganized company when it emerges from bankruptcy to fund benefits. The deal would cover 4,600 workers represented by seven unions.
Tower also said it could make additional cash payments if the company reaches certain financial milestones.
In the meantime, Tower will continue existing payments for the Milwaukee workers through June 30.
Tower CEO Kathleen Ligocki first unveiled the separate agreements at a luncheon Wednesday, April 5, in Detroit. In a release Thursday, she said the agreements resolve about 90 percent of the company's retirement obligations. The deals were filed Thursday in U.S. bankruptcy court in New York and are subject to court approval.
Tower filed for Chapter 11 bankruptcy protection in February 2005. It has asked for court approval to dissolve its labor contracts.
Ligocki said Tower continues to negotiate with the UAW and United Steelworkers to reach new contracts aimed at cutting costs.
Tower, of Novi, Mich., ranks No. 45 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $3.20 billion in 2004. The company supplies structural components, assemblies and suspension modules.
Amy Wilson contributed to this report
You may e-mail Greg Migliore at [email protected]