Platinum Equity“s bid to withdraw from buying PPG Industries“ automotive glass business was greeted with relief by workers at the Creighton, Pennsylvania PPG plant. They fear an ownership change cou…
Platinum Equity“s bid to withdraw from buying PPG Industries“ automotive glass business was greeted with relief by workers at the Creighton, Pennsylvania PPG plant. They fear an ownership change could jeopardize retirement benefits. If Platinum Equity, a private equity firm, had proceeded with the USD 500 million deal, it might not have honored terms of PPG“s contract with the United Steelworkers of America, Creighton plant workers said 29 December 2007. The contract, which runs until March 2009, lets workers with 30 years service retire with full benefits, regardless of age. “I“m elated for the employees because within the next six months, at least 100 of them will be eligible to retire”, said Steve Hloznik, 61, who has worked 41 years at PPG. “If Platinum had taken over that pension, it may have been in jeopardy”. Another Creighton plant worker, Cathy Mlynarski of Lower Burrell, said she too was happy at the outcome. “There“s a lot of people near retirement who were concerned” about the sale, she said. “We have a successorship clause in our contract that says whoever buys this business has to honor the current contract”, said Hloznik, who was USW Local 12-G president from 1990 to 1993. “We expect it to be honored. But if it isn“t, we“d take them to court”. Current officials of the USW could not be reached for comment. The California firm sued PPG in New York State Supreme Court on 27 December 2007 to terminate the deal, claiming the Pittsburgh industrial firm had inflated 2008 revenue and profit projections, failed to disclose that two key customers would cut purchases in 2008 and distorted other aspects of the automotive glass business. One of Platinum“s claims was that PPG “substantially understated” pension obligations Platinum would assume, the lawsuit stated without supplying figures. The firm says that because of PPG“s alleged fraud, Platinum should not have to pay the USD 25 million deal-termination fee. The deal, announced in September, would affect some 4,400 PPG employees in the United States and Canada. “I don“t anticipate this is going to hold up in court. I doubt Platinum has much of a case here”, said Tom Uutala, research analyst for Victory Capital Management, Cleveland, which owns 4.9 million PPG shares. Mr. Uutala said PPG should collect the USD 25 million termination fee, if Platinum withdraws. Then PPG could find other buyers, although a new deal might carry a “slightly lower” price, he said.