Advanced Glassfiber Yarns LLC says it can no longer afford to provide its retired workers with the present level of medical benefits and is seeking permission to reduce the level of benefits from the …
Advanced Glassfiber Yarns LLC says it can no longer afford to provide its retired workers with the present level of medical benefits and is seeking permission to reduce the level of benefits from the bankruptcy court handling its Chapter 11 case. In court papers, the company says the move is needed due to its poor financial state, with cost cutting essential if it is to reorganize. A hearing on the retiree benefits issue is scheduled for 28 July 2003 in the U.S. Bankruptcy Court in Wilmington, Delaware. Objections are due by 10 July 2003. Advanced Glassfiber provides retiree life insurance benefits that are paid for solely by itself, and court papers said that while the company reserves the right to change those benefits, it is not seeking to do so now. The company also provides retiree medical benefits, and eligible retired workers covered under the plan must pay deductibles and co-payments and are required to make monthly contributions. Court papers said that the contributions of medical plan participants do not compare with the company“s expenses. Advanced Glassfiber said it anticipates its medical coverage costs will reach about USD 3.5 million for 2003, due to health-care inflation trends. Advanced Glassfiber said that the current level of retiree medical benefits has become unsustainable in relation to the company“s size, revenue and income. The papers said that the firm“s retiree medical benefits program must be reduced as part of the company“s Chapter 11 restructuring process, if it is to become competitive and profitable after it emerges from bankruptcy. As such the company is seeking to reduce its retiree medical benefits liabilities by more than USD 22 million, court papers said. “These savings, coupled with the provisions of the (company“s) plan, will permit the (company) to emerge from bankruptcy as a financially sound enterprise better able to compete within the global glassfiber yarns industry,” court papers said. Advanced Glassfiber makes and supplies glass yarns to customers in Latin America, Asia, Canada, Europe and the U.S. The company said its Chapter 11 filing was brought on by a significant global economic downturn and inventory correction in the electronics market. Advanced Glassfiber filed for Chapter 11 protection on 31 October 2002, listing assets of USD 194.1 million and debts of USD 409 million. When the company filed for bankruptcy, it employed 1,205 people. Since then, it has furloughed 350 workers at three manufacturing plants, in Aiken (South Carolina), South Hill (Virginia) and Huntingdon, (Pennsylvania) court papers said.