Billionaire industrialist Ira Rennert proved no match for a group of retired steelworkers after a three-year battle.
Rennert’s holding company, Renco Group, will restore full pension benefits for 1,350 retirees who worked at its bankrupt RG Steel unit under a settlement with the US pension agency.
Renco will take responsibility for the pension plans as of June 1, and agreed to reimburse the agency for $15 million in benefits that it paid to RG Steel retirees. Additionally, the company will pay about $35 million in shutdown benefits that would have gone unpaid absent the restoration of the pension plans.
The deal marks only the second time in the PBGC’s history that a terminated plan was restored to an employer. The entity insures multi-employer pension plans and steps in when a plan doesn’t have enough money.
The PBGC claimed the mining mogul tried to evade paying the retiree obligations by lying about the impending sale of the nearly bankrupt RG Steel. The government entity said it would have terminated the plans if it had known a sale was imminent, saddling Renco with the pension costs.
Rennert’s company denied any wrongdoing.
“Renco strongly believes, as we have throughout, that the PBGC’s allegations were erroneous and that the company acted appropriately and within its rights when it concluded a financing transaction that had the incidental effect of releasing Renco from liability for RG Steel’s pension plans,” a spokesman said.
The PBGC sued Renco for $97 million over the January 2012 sale of a 24.5 percent stake in RG to private equity firm Cerberus Capital Management. The deal was aimed at pawning off RG Steel’s pension liability rather than saving the company, the agency alleged.
“The singular purpose of Renco’s efforts to obtain financing for RG Steel was to solve the company’s liquidity problem and save it from bankruptcy,” the Renco spokesman said on Friday.
The settlement followed a trial in December in Manhattan before US Judge Richard Sullivan, who had yet to issue a decision.
Last year, a federal jury found Rennert and Renco liable for looting the former MagCorp. to build his 21-bedroom mansion in the Hamptons. They were ordered in that case to repay the company $117 million.