Maytag reaches tentative pact on new contract at Herrin

Maytag reaches tentative pact on new contract at Herrin
 
Date June 10, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

Maytag Corp. said today that it reached a tentative agreement on a four-year labor deal with the union representing workers at its Herrin, Ill., laundry plant.

The new contract is pending approval by members of the International Association of Machinists and Aerospace Workers, Local 554, which has scheduled a vote for Saturday. The existing contract is set to expire on Sunday.

The company recently agreed to be purchased by an investor group led by private equity firm Ripplewood Holdings LLC. Under the deal, which yet needs approval by shareholders, Ripplewood will acquire all outstanding shares of Maytag at $14 a share, or approximately $1.2 billion. In addition, the investor group, which also includes RHJ International, GS Capital Partners and the J. Rothchild Group, will assume approximately $975 million of Maytag debt making the deal worth approximately $2.1 billion.

The contract with the I.A.M., if ratified by the membership, could ensure Herrin’s future as the company’s dedicated facility for all vertical-axis washing machine production.

These latest contract talks come at a time when Maytag is struggling to improve its cost position. In April, the appliance maker reported plunging first-quarter profit and slashed its full-year forecast in half. The company said then that it will take “more aggressive steps” to restructure its manufacturing operations and cut costs, including potentially closing its Newton Maytag laundry plant and its North Canton, Ohio Hoover vacuum production facility.

Maytag shares, which have steadily declined from a 52-week high of $25.30 last year, were trading down 3 cents today at $14.56.

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