AK Steel and retirees settle lawsuit

AK Steel Holding Corp. and a group of retirees at the company's Middletown Works plant have settled a lawsuit over a plan to have retirees contribute to health care premiums, the parties said Monday.

Shares of the West Chester-based company jumped more than 11 percent after the announcement, gaining $4.80, to $47.78.

The agreement calls for AK Steel to transfer health care obligations for about 4,600 retirees from its largest mill to a Voluntary Employees Beneficiary Association trust, which will be managed by the retirees.

The settlement must be approved by the U.S. District Court in Cincinnati, where the retirees filed their suit in July 2006.

"We said from the beginning, our job was to protect retirees' health care benefits," said Michael Bailey, the lead plaintiff and president of the retirees' group, Concerned Armco Retired Employees. "This settlement does that. It makes sure AK Steel can never mess with our benefits again."

AK Steel is to fund the trust with a contribution of $468 million, and with three subsequent annual contributions of $65 million each for a total of $663 million. The initial contribution will take place in the first quarter of 2008, the company said.

AK Steel announced last year that it would start charging retirees a monthly premium for a portion of health care insurance costs. The plan was part of a package of wage and benefit proposals the company made during a nearly 13-month lockout at the Middletown Works.

Retirees won a temporary injunction blocking the charge, and the case was expected to go to trial in January.

AK Steel makes flat-rolled carbon steel and stainless and electrical steel used in cars and appliances. Besides the Middletown plant, the company has smaller plants in Zanesville, Mansfield and Coshocton; Ashland, Ky.; Rockport, Ind.; and Butler, Pa.

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On the Net:

AK Steel: http://www.aksteel.com