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June 20, 2007
NOTICE OF AMENDED AGREEMENT
Most of you will receive, over the next few days a Notice of Motion for Entry of an Order Approving Amended Agreements with the Milwaukee Unions, other Unions and the Retiree Committee which represents Non-Union Retirees. Provisions of each agreement are summarized in the Motion. The provisions of the Milwaukee Agreement are summarized on pages 11 and 14 of the Motion.
Tower intends to sell most of its assets. The Milwaukee Unions entered an Amended Agreement to protect employee' and retirees' most important rights with the purchasing company. This is particularly important because the proposed sale price will not provide the resources for continued benefits or for payment of amounts owed by Tower. The Amended Agreement is with Tower and with Tower Automotive Acquisition Company, LLC ("TAAC") which intends to purchase Tower's assets. The agreement will not become effective unless TAAC purchases Tower or another purchaser accepts the terms of the agreement.
THE KEY POINTS IN THE AMENDED AGREEMENT ARE:
- TAAC agrees to assume the pension and not "amend or modify the pension plan...in a manner which would reduce any benefits.
- TAAC has also agreed to continue life insurance benefits at their current level which was reduced under the prior agreement to the "lowest level of coverage for which each individual would ever be eligible."
- TAAC will continue to contribute to the Milwaukee VEBA and to provide the Medicare Part B supplement payments through the end of 2008.
- TAAC however will not provide funding for the Milwaukee VEBA or pay the Medicare Part B supplement after December 31, 2008.
The Milwaukee Unions shall have a general unsecured claim for the reduction and retiree benefits. That claim is in the amount of $133,265,000 of which $12 million is a general unsecured claim to settle claims concerning reduction of retiree benefits which was the subject of grievances and the federal court litigation before the bankruptcy. It is unlikely that this general unsecured claim will provide a substantial recovery. The Disclosure Statement which many of you received (which looks like a phone book about an inch thick) states on page 5 that "R. J. Tower general unsecured claims" will recover only .4% of the amount of the claim. That is .4 cents on the dollar. Other general unsecured claims of Tower U.S. subsidiaries will recover less than .1 cents per dollar on the claim.
The claim floor and back end payment have been removed from the settlement agreement.
The Milwaukee Unions have agreed to these additional modifications first to obtain the purchaser's agreement to assume and not modify the pension plan, secondly to continue the life insurance benefit and thirdly to continue health insurance through 2008.
If there are any questions any of you have, feel free to give me a call at the State AFL-CIO building, 6333 West Bluemound Road, or call me at 414-871-2460. I will try to answer your questions or try to find them for you.
Donald Schrauth
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