Amarillo Daily News (Texas), August 12, 2005, Friday
Copyright 2005 Knight Ridder/Tribune Business News
Copyright 2005 Amarillo Daily News (Texas)
Amarillo Daily News (Texas)
August 12, 2005, Friday
HEADLINE: Asarco files for bankruptcy
BODY:
Asarco copper refinery filed for Chapter 11 bankruptcy Wednesday, leaving nearly 400 Amarillo workers questioning what their futures might be.
The company, which began its local operation in 1922, had more than half its local work force go out on strike July 6.
One of those employees, Gary Larson said he got a sick feeling in the pit of his stomach when he first heard his longtime employer filed for bankruptcy protection Wednesday. He and 270 members of United Steelworkers Local 5613 and International Brotherhood of Electrical Workers Local 602 went on strike after working a year without a labor contract.
The company's move dulled his optimism for this weekend's labor negotiations.
Local refinery workers joined about 1,300 other unionized Asarco employees in Arizona who struck the company, claiming it engaged in unfair labor practices. The company denied the charges.
Asarco, which operates mines, smelters and the Amarillo refinery, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Corpus Christi.
In a statement, President Daniel Tellechea said despite high copper prices, Asarco is recovering from a long downturn in the copper market. The company is overwhelmed with asbestos and environmental liabilities, high-cost pension and health benefits, the labor strike, and downgrading of the company debt rating, Tellechea said.
He detailed more of the company's difficulties, including 95,000 asbestos-related personal injury claims pending against Asarco or two of its subsidiaries and pending bankruptcies of Asarco subsidiaries. He also said the company is a party to many legal actions that result from mining operations in the last 106 years.
To the average worker, the company's action may not mean much, said Les Huntington, president of United Steelworkers Local 5613.
"We're running a picket line ... and will be until it's settled," said Huntington.
Huntington said the refinery is operating in a limited way, run by management personnel.
The good news for Asarco employees is the company isn't liquidating.
"Filing a petition for Chapter 11 bankruptcy indicates that Asarco intends to stay in business," said attorney David Jones, a partner in Sprouse Shrader Smith law firm. Resolution of the case could take as long as a couple of years, he said.
"The goal of a Chapter 11 bankruptcy is to obtain approval of a plan of reorganization," said Jones, who is board-certified in business and consumer bankruptcy law in Texas. The plan "generally provides for treatment of creditors and other stakeholders in a way that allows the debtor to emerge as a viable entity in the long term."
Contracts -- including dealings with labor unions -- could be amended, he said. Creditors could be given partial ownership of the business in exchange for their claims.
"There are several possibilities," Jones said.
The reorganization process doesn't have a set time frame. "A quick bankruptcy could see a plan confirmed in six or seven months," Jones said.
But the larger the case, the more complex the issues. "It would not be unusual in a large case for it to take two years or more to get a plan confirmed," Jones said. The other bankruptcy option is Chapter 7, a proceeding in which a company's assets would be liquidated and the cash distributed to creditors, he said.
However, if declaring bankruptcy is a maneuver to break the union and that case can be made before the National Labor Relations Board, the move could put the company at risk for millions of dollars, said Lance Compa, a professor of labor law at Cornell University's School of Industrial and Labor Relations in Ithaca, N.Y.
The union would first have to file a charge with the NLRB, which would launch an investigation.
"If it can be shown that the purpose is to break the union, that would be an unfair labor practice and workers could get possibly millions of dollars in back pay damages," he said. "If it is a sincere, genuine economic bankruptcy, then the company can go through with the bankruptcy and the workers would preserve any benefits, unless they terminated the contract."
By Cheryl Berzanskis And Marty Primeau. Staff Writer George Schwarz contributed to this report.
WHAT DOES ASARCO DO?: The company produces a variety of metals from copper to high purity specialty metals for manufacturing electronics to precious metals such as gold and silver. In Amarillo, the company refines copper into long strands and rectangular cakes. It also processes partially refined copper with gold and silver present as impurities. The impurities are removed and refined along with precious-metal-bearing scrap purchased on the open market. In 2000, the smelter produced 357,900 tons of copper and 20,776 ounces of silver.
Sources: Asarco Web site.
ASARCO SITES: Units are in five states: five in Arizona, one in Colorado, two in Texas (El Paso and Amarillo), one in Montana and three in Tennessee. The Amarillo smelter is nine miles northeast of the city off of Texas Highway 136.
Source: Asarco
ASARCO TIMELINE:
--1899: Company organized as American Smelting and Refining Company
--1922: Amarillo zinc smelter construction begins
--1975: Zinc smelting ends in Amarillo, copper refining begins
--1980: Amarillo workers strike for three months
--1999: Grupo Mexico pays $ 2.2 billion (including debt) for Asarco
--July 6: Amarillo Asarco unions vote to strike
Source: Globe-News files and Asarco
-----
To see more of the Amarillo Globe-News, or to subscribe to the newspaper, go to http://www.amarillonet.com. Copyright (c) 2005, Amarillo Globe-News, Texas
Distributed by Knight Ridder/Tribune Business News.For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.
<< Home