Canton Repository

October 24, 2006

Feds take control of Republic Storage pensions

By Paul M. Krawzak
Copley News Service

WASHINGTON - A federal agency has taken control of pensions at Republic Storage Systems in Canton, ensuring that almost 900 current or former employees will receive retirement benefits.

The Pension Benefit Guaranty Corp., which insures corporate pensions, on Monday announced it has taken responsibility for two pension plans at the formerly bankrupt company.

Retirees of the company will continue to receive their monthly benefit checks without interruption, the agency said. Current or former employees who have not yet reached retirement age will receive their benefits when they become eligible.

An undetermined number of retirees and employees will see a cut in their benefits because the agency insures pensions up to a maximum of $47,659 a year for a person retiring at age 65, the agency said.

Gary Pastorius, a spokesman for the federal agency, said that amount falls short of pension benefits awarded to the most highly paid Republic employees.

The agency has not yet determined how many will get reduced pensions, he said. On average, about 10 percent of retirees see a cut in their benefits when their pensions are taken over by the agency.

Republic manufactures lockers, industrial and commercial shelving, storage racks and shop equipment.

Chrysalis Capital paid $20 million for Republic in May, after the company filed for Chapter 11 bankruptcy protection in March. Officials said damage from flooding in 2003, the doubling of steel prices in 2004 and costly retiree health-care and pensions prevented the firm from paying its bills.

Chrysalis, a Philadelphia-based equity firm, did not assume sponsorship of the pension plans when it bought Republic.

The two plans cover 872 employees, including 635 in a bargaining unit represented by the Steelworkers union and 237 nonunion personnel.

The union plan includes 376 active workers, 179 retirees and 80 who were vested in the plan when they left the company.

Those covered by the nonunion plan include 109 active employees, 66 retirees and 62 who were vested when they left the company.

Company retirees lost their health insurance, which is not insured by the federal agency. Employees of the company who invested in the Republic stock plan also lost their investments.

The reconstituted Republic replaced its pension plans with a tax deferred 401(k) retirement savings plan, said Eric Cook, chief financial officer.

No comment on the federal action was immediately available from the Steelworkers union.