Sonja Elmquist Bloomberg News
West Chester-based AK Steel Holding Corp., will cut its estimated 2013 pension expense by one-third, or $100 million, after passage of a transportation bill extension lowered some required contributions.
AK Steel will pay $200 million into its pension fund in 2013 after the Surface Transportation Extension Act of 2012 was signed into law on July 6, the company said on Monday in a filing with the Securities & Exchange Commission.
The bill stabilizes the minimum annual contributions to fund defined-benefit pension plans, while raising premiums paid to the Pension Benefit Guaranty Corp., AK said.
Standard & Poor’s Ratings Services downgraded AK Steel’s credit rating to B+, or four levels below investment grade, on June 29. “Weak” results at AK won’t recover in the next several quarters because of the steelmaker’s high fixed costs and lower prices than expected for the metal, the ratings company said.
The company is also canceling a $310 million co-generation plant in Middletown. AK Steel told the Hamilton Journal News that current prices made it cheaper for the company to buy electricity than generate it.
“It’s unfortunate it didn’t work out, but also it’s strictly economics,” said Barry Racey, AK Steel spokesman, told the paper. “Cogeneration is a good technology and it’s good for the environment and it’s good as an alternate way of generating electricity and steam, in our case.”
AK Steel closed on Monday down 2 cents to $6.12. The company raised its price for its flat steel products by $40 a ton on July 6. It reports quarterly earnings on July 24.
